2016 (10) TMI 1223 - AT - Central Excise

Utilization of CENVAT Credit - Default in payment of monthly duty beyond 30 days from the due date - Rule 8 (3A) of Central Excise Rules, 2002 - Held that - Appellant relies upon the judgement of Hon ble Gujarat High Court in the case of Indsur Global Ltd. Vs Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT , where it was held that the relevant portion of Rule 8 (3A) relating to bar of utilization of cenvat credit by such defaulters to be ultra vires. The Hon ble Madras High Court has also set aside the proceedings pending on this count - but Revenue points out that the above High Court judgement has been appealed against to the Supreme Court and the same has been ordered by the Hon ble Supreme Court to be tagged along with SLP in the case of Commissioner Versus A.R. Metallurgicals P. Ltd. 2016 (1) TMI 1380 - SUPREME COURT . The appeal is remanded back to original adjudicating authority with the direction for denovo consideration, based on the parameters of the final ruling of the Hon ble Supreme Court in the matter.

Summary

Issues: Manufacturer's default in duty payment, applicability of Rule 8 (3A) of Central Excise Rules, 2002, imposition of penalty, High Court judgment on utilization of cenvat credit, Supreme Court appeal, remand to original adjudicating authority.

In this case, the manufacturer defaulted in paying monthly duty beyond 30 days from the due date for clearances made between November 2012 to August 2013. The original adjudicating authority held that the clearances made without payment through current account/cash are deemed to be clearances without duty payment. Consequently, a duty of ?33,39,502/- along with interest and penalties was imposed. The authority also ordered confiscation of the goods but imposed a fine in lieu of confiscation. On appeal, the Commissioner (Appeals) dropped the redemption fine, reduced the penalty to ?3.50 lakhs, but upheld the remaining adjudication order. The appellant argued that the Hon'ble High Court of Madras had already decided a similar matter, agreeing with the judgment of the Hon'ble Gujarat High Court, declaring the relevant portion of Rule 8 (3A) as ultra vires. The High Court set aside the proceedings related to this issue. However, the Assistant Commissioner pointed out that the High Court judgment was appealed to the Supreme Court and was tagged with another case. Consequently, the appeal was remanded back to the original adjudicating authority for reconsideration based on the final ruling of the Supreme Court.

Therefore, the appellate tribunal remanded the appeal to the original adjudicating authority for denovo consideration in light of the parameters set by the final ruling of the Hon'ble Supreme Court in the matter. The case highlights the significance of legal interpretations, the impact of High Court judgments on lower tribunals, and the necessity to adhere to the directives of higher courts in similar matters. The decision emphasizes the importance of legal precedents and the need for consistent application of legal principles across different levels of the judicial system.