Applicability of rule 8(3) - as reversal of cenvat duty is not duty on removal of goods

[sunil mehta]

A small weaver opted to avail exemption under notn.no.30/2004 dt.9/7/04.The balance of cenvat duty on 8/7/04(budget day) in RG23 Pt.-II was rs.909/-.The cenvat duty in cl.stock of raw-mat.on 8//704 was rs.20333/-The bal.amt rs.19424 was paid through TR-6 challan on 24/12/04. The Asst.comm.has issued notice that interest on late payment of so called 'cenvat duty'(arisen as a result of revarsal of cenvat duty only)be paid as per rule 8(3) of Central Excise Rules [email protected]/-per day of default ant @ 13% p.a.u/s 11AB. qUERY:WHETHER aSST.COMM.IS JUSTIFIED IN APLLYING rule 8(3)?Since rule 8(3) states that 'any duty payable on removal of goods'.Now 'reversal of cenvat duty is not duty on removal of goods.Therefore,rule 8(3) does not apply abinitio.

Pl.discuss.

sunil v mehta

[Surender Gupta]

In your case Cenvat Credit is required to be reversed under Rule 9(2) of the earstwhile Cenvat Credit Rules, 2002 (Now rule 11(2). This rule does not put any condition of payment of Interest. Further the action of the Asst. Commission is wrong to impose interest under rule 8 of Central Excise Rules.

AI Summary

Reversal of cenvat credit not treated as duty on removal; delayed-duty interest provision inapplicable to such reversals. Whether interest under the delayed-duty provision applies where liability arises from reversal of cenvat credit; the cenvat reversal mechanism governs adjustment and does not convert the reversal into a duty on removal nor prescribe interest under the delayed-duty provision, so imposing that interest is inconsistent with the reversal rule.