CENVAT credit and PLA payment of excise duty during withdrawal of fortnightly facility did not attract interest or penalty.

For the period when the fortnightly payment facility was withdrawn, duty could be discharged either through PLA or by utilisation of CENVAT credit as directed by the department. Following the Larger Bench ruling in Noble Drugs Ltd., the Tribunal held that this payment method did not attract interest or penalty under Rule 173G(1)(d) of the Central Excise Rules, 1944. The demand for interest was therefore unsustainable, the impugned order was set aside, and the appeals succeeded with consequential relief.

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Issues: Whether interest under Rule 173(G)(1)(d) of the Central Excise Rules, 1944 was payable when duty during the period of withdrawal of fortnightly payment facility was discharged through CENVAT credit as directed by the department and later from PLA.

Analysis: The Tribunal followed the Larger Bench ruling in Noble Drugs Ltd., which had held that for the relevant period an assessee could discharge the duty liability either from PLA or by utilising CENVAT credit, and that failure to do so did not attract interest or penalty. The issue was therefore treated as already settled.

Conclusion: Interest was not payable on the facts, and the demand could not be sustained.

Final Conclusion: The impugned order was set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: During the period of forfeiture of fortnightly payment facility, duty could validly be paid through PLA or CENVAT credit, and no interest or penalty arises for such payment mode.

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