Interest on clearance of inputs and capital goods is not leviable when CENVAT debit is made within the Rule 8 time limit.

Interest under Section 11AB of the Central Excise Act was not payable on clearance of inputs and capital goods as such when the assessee debited an amount equal to the CENVAT credit availed by the 5th day of the following month. The applicable scheme under Rule 8 of the Central Excise Rules allowed duty payment by that date for removals made during the month, and the same timing applied to inputs and capital goods removed as such. The debit under Rule 3(4) of the CENVAT Credit Rules, 2002 and Rule 3(5) of the CENVAT Credit Rules, 2004 was therefore within time, so no delay in duty payment arose and interest was not leviable.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 was payable on clearance of inputs and capital goods as such when the amount equal to CENVAT credit availed was debited by the 5th day of the following month under Rule 8 of the Central Excise Rules, 2002.

Analysis: The relevant scheme permitted payment of duty by the 5th day of the following month for removals made during the month, and the same facility applied to inputs and capital goods removed as such. The debit made by the assessee in terms of Rule 3(4) of the CENVAT Credit Rules, 2002 and Rule 3(5) of the CENVAT Credit Rules, 2004 was within the permissible time under Rule 8. On that footing, the clearance could not be treated as a delay in payment of duty so as to attract interest under Section 11AB.

Conclusion: Interest was not leviable and the Revenue's appeals failed.

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