2008 (12) TMI 418 - HC - Central Excise

Payment of duty - sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 - default in making payment of excise duty for the months of September, October and November, 2007 - It is not in dispute that till this date the outstanding dues for the said months to the extent of Rs. 1,06,26,770-00 is still not paid - The petitioners are also in default in making payment of excise duty since June, 2008 - Held that - the claim made by the petitioners that the outstanding excise duty be permitted to be paid through CENVAT credit accumulated after the due date of payment is contrary to the CENVAT rules and cannot be accepted. Hence, defaults committed by the petitioners, coercive action taken by the respondents-authorities in exercise of the powers conferred by law, interim relief pending the petition is refused.

Summary

Issues:
Challenge to constitutional validity of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 | Stay on operation and implementation of directions for outstanding excise duty payment | Default in payment of excise duty | Coercive action by respondents-authorities | Refusal of interim relief.

Analysis:
The petition under Article 226 of the Constitution of India challenges the constitutional validity of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, alleging it to be arbitrary and beyond the authority conferred by Section 37 of the Central Excise Act. The petitioners seek a stay on the operation and implementation of directions for the payment of outstanding excise duty. The petitioners were found to be in default in payment of excise duty for several months, with a substantial outstanding amount remaining unpaid. The petitioners' request to pay the outstanding excise duty through CENVAT credit accumulated after the due date is deemed contrary to CENVAT rules and thus rejected.

The court notes the admitted defaults in payment of excise duty by the petitioners, including outstanding dues for specific months. Given the default and the coercive action taken by the respondents-authorities in accordance with the law, the court refuses to grant interim relief pending the petition. The refusal of interim relief is based on the established defaults and the actions taken by the authorities as per their conferred powers. The court emphasizes the importance of compliance with excise duty payment obligations and upholds the authorities' actions in response to the defaults committed by the petitioners.