Court denies Cenvat Credit for late duty payments, directs cash payment with waiver on pre-deposit.

The court held that the applicant was not entitled to utilize Cenvat Credit for belated duty payments based on precedents from the Hon'ble Karnataka High Court and Hon'ble Madras High Court. The applicant was directed to pay Rs. 2,49,963/- in cash within eight weeks. Upon this payment, the remaining dues' pre-deposit was waived, and recovery stayed pending the appeal hearing. Compliance report was ordered by 21.3.2014.

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Issues: Application for waiver of pre-deposit of duty, interest, and penalty under Rule 8 (3A) of the Central Excise Rules, 2002.

Analysis:
1. The applicant sought waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 3,70,422/- based on default in payment of duty on due dates. The applicant utilized Cenvat Credit for duty payment during the default period.

2. The applicant argued that the defaulted payment was subsequently made, and interest paid in cash, making the utilization of credit during the default period compliant with Rule 8 (3A) of the Central Excise Rules, 2002.

3. The Revenue cited judgments from the Hon'ble Karnataka High Court and Hon'ble Madras High Court, emphasizing that there is no provision for utilizing Cenvat Credit for belated payments. The applicant utilized credit amounting to Rs. 2,49,963/- during the default period.

4. Considering the decisions of the High Courts, it was held that the manufacturer is debarred from using credit during the default period. The applicant was directed to pay Rs. 2,49,963/- in cash within eight weeks. Upon this payment, the pre-deposit of the remaining dues was waived, and recovery stayed for the appeal hearing.

5. The compliance report was scheduled for 21.3.2014, as per the court's directive.

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