Cenvat credit remained a valid mode of excise duty payment despite forfeiture of instalment under the unamended rule.

During the period when the instalment facility for excise duty payment was forfeited under Rule 173G(1)(e), the Court distinguished between the timing of payment and the mode of payment. It noted that the rule withdrew only the fortnightly payment facility and required duty to be paid on each consignment, but did not expressly prohibit discharge through valid Cenvat credit, which Rule 173G(1)(b) recognised alongside payment through the account current. The subsequent introduction of Rule 8(3A) with an express non obstante clause was treated as a later legislative change, not part of the unamended regime. Cenvat credit remained a permissible mode of payment, and interest could not be levied on the amount so adjusted as delayed duty.

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Issues: Whether, during the two-month period when the facility of paying excise duty in instalments was forfeited under Rule 173G(1)(e) of the Central Excise Rules, 1944, the assessee was required to pay duty only in cash through account current or could validly discharge the duty liability by utilising Cenvat credit, and consequently whether interest was leviable on the amount first adjusted through Cenvat credit.

Analysis: The forfeiture under Rule 173G(1)(e) withdrew only the facility of fortnightly payment and required duty to be paid on each consignment. The distinction between the timing of payment and the mode of payment was material. Rule 173G(1)(b) expressly recognised discharge of duty either by debiting the account current or by utilising Cenvat credit. The prohibition in clause (e) did not expressly take away the separate statutory entitlement to use valid credit. The Court held that Cenvat credit, being as good as tax paid, remained a permissible mode of discharge unless a clear prohibition was enacted. The subsequent amendment inserting Rule 8(3A) with an express non obstante clause showed that such an exclusion was introduced only later and not under the unamended regime.

Conclusion: The assessee was entitled to utilise Cenvat credit during the suspended period, and the demand of interest treating that payment as delayed was not sustainable.

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