Duty payment through Cenvat credit during forfeiture period amounted to continuing default, justifying interest under excise rules.

Where the fortnightly duty-payment facility stood forfeited for two months after default, excise duty had to be paid for each consignment through the prescribed account current. Payment through the Cenvat Credit account during that forfeiture period was not a permitted mode and was treated as a continuing default. The resulting delay in crediting revenue justified levy of interest under the Central Excise Rules, and the objection to interest was rejected.

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Issues: Whether interest could be demanded when excise duty, during the period of forfeiture of the fortnightly payment facility, was paid through Cenvat Credit account instead of the permissible account current by the due date.

Analysis: On default in payment of duty on the prescribed due dates, the facility to pay duty in instalments stood withdrawn for two months under Rule 173G(1)(e) of the Central Excise Rules. During that period, duty was required to be paid for each consignment through the account current contemplated by the rule, which was not available for utilisation of Cenvat Credit in the manner adopted by the appellant. Payment through an impermissible mode during the forfeiture period was treated as continued default, and the delay in crediting revenue justified levy of interest under Rule 173G(1)(d).

Conclusion: Interest was rightly demandable and the objection to its levy was rejected.

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