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

Weaver Challenges Interest Demand on Cenvat Duty Reversal; Rule 8(3) Misapplied Instead of Rule 9(2) A small weaver who opted for an exemption under a specific notification faced an issue regarding the reversal of Cenvat duty. The Assistant Commissioner issued a notice demanding interest on the late payment of Cenvat duty, citing Rule 8(3) of the Central Excise Rules, which applies to duties payable on the removal of goods. However, the reversal of Cenvat duty is not considered a duty on removal. A respondent clarified that the reversal should be under Rule 9(2) of the Cenvat Credit Rules, which does not require interest payment, making the Assistant Commissioner's action unjustified.