Cenvat credit can be utilized for payment of excise dues
31st March, 2012
Excise duty arrears can be paid by utilizing the Cenvat credit which has accrued subsequent to the period to which the arrears pertain. Circular No. 962/5/2012-CX issued by the Central Board of Excise & Customs on 28th March, 2012 clarifies this issue and states that the restriction on utilization of Cenvat credit accruing subsequent to the last date of the month/quarter in which the arrears arise, is not applicable to the demands confirmed under Section 11A of the Central Excise Act, 1944.
The circular observes that the department has been allowing, as a practice, payment of duty demanded under Section 11A through Cenvat credit utilisation without linking the same to the period of demand. Duty payable under Rule 8 of the Central Excise Rules, 2002 is on a different footing from duty payable under Section 11A, according to the Board.
Way back in 2008, the CESTAT in its decision in the case of Arjay Apparel Industries [2008 (232) E.L.T. 662 (Tri. - Chennai)] had observed that there was no prohibition on payment of short paid/unpaid/defaulted amount of duty using the Cenvat credit.