Payment of Interest

[Srivatsan Krishnamachari]

Dear Learned Friends,

 Liability  towards shot-paid duty or service tax is fulfilled by debiting the cenvat account.. Can interest herein be paid from Cenvat Account or  by only by making cash payment . Is payment of interest from cenvat  account specifically forbidden by the relevant rules.Can you please  clarify this .

Thanks & With Regards,

K.Srivatsan

[YAGAY andSUN]

Under Customs Act,1962Central Excise Act,1944 and Finance Act,1994, Interest and Penalties are required to be paid in cash only.  There could not be any adjustment from the CENVAT credit Account.

[Mahir S]

Yes, and same for Payment of Penalty too..

AI Summary

Payment of interest must be made in cash; Cenvat credit cannot be used for interest or penalties. Respondents confirm that interest and penalties on short-paid duty or service tax must be paid in cash and cannot be adjusted from the CENVAT credit account, so CENVAT balances cannot be used to discharge interest or penalty liabilities.