Valid CENVAT credit payment prevents a second cash duty demand, while delayed payment attracts interest and procedural penalty only.

Valid payment of duty through CENVAT credit cannot be re-demanded in cash or through the personal ledger account merely because payment was delayed. The delay attracts interest only for the period of default, not a fresh duty liability. An equivalent penalty under Rule 25 is not sustainable where there is no fraud, wilful misstatement, suppression of facts, or intent to evade duty. In those circumstances, the contravention is confined to the procedural penalty prescribed under Rule 27.

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Issues: (i) Whether duty paid through CENVAT credit, instead of cash or PLA, could be demanded again where duty was paid belatedly; (ii) Whether equivalent penalty under Rule 25 was sustainable.

Issue (i): Whether duty paid through CENVAT credit, instead of cash or PLA, could be demanded again where duty was paid belatedly.

Analysis: Payment of duty through CENVAT credit was valid and could not be required to be paid again in cash or through PLA. A delay in payment attracted only interest for the period of default.

Conclusion: The assessee was liable only for interest of Rs. 22,457 and not for a fresh cash payment of the duty.

Issue (ii): Whether equivalent penalty under Rule 25 was sustainable.

Analysis: There was no fraud, wilful misstatement, suppression of facts, or intent to evade duty. The earlier appellate order had also treated the contravention as warranting penalty under Rule 27 rather than Rule 25.

Conclusion: The equivalent penalty under Rule 25 was not sustainable; the assessee was liable to a penalty of Rs. 5,000 under Rule 27.

Final Conclusion: Delayed discharge of duty through valid CENVAT credit use attracts interest, while absence of culpable intent confines the penalty to the prescribed procedural penalty.

Ratio Decidendi: Duty validly paid through CENVAT credit cannot be re-demanded in cash merely because of delayed payment; absent fraud, suppression, wilful misstatement, or intent to evade duty, an equivalent penalty is not imposable.

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