2019 (2) TMI 1922 - AT - Central Excise

Default for payment of Central Excise duty - payment of Central Excise duty made on goods cleared on consignment to consignment basis only in cash without making use of the credit accumulated in cenvat credit account - vires of Rules 8 (3) 8 (3A) of the Central Excise Rules 2002 - October 2013 to January 2014 - HELD THAT - The Jurisdictional High Court at Calcutta in the case of Goyal MG Gases Pvt. Ltd 2017 (8) TMI 1515 - CALCUTTA HIGH COURT while taking note of the fact that the decision in Indsur Global 2014 (12) TMI 585 - GUJARAT HIGH COURT has been stayed observed that the Revenue cannot take a stand contrary to that taken in other High Courts and accordingly declared the rule to be invalid. The decision of jurisdictional High Court of Calcutta in the case of Goyal MG Gases Pvt. Ltd is followed which has not been stayed and has a binding force as on date. Accordingly it is concluded that there is no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise Duty even during default period. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of Rule 8 (3A) of the Central Excise Rules, 2002.
- Validity of demanding payment of Central Excise duty in cash during default period.
- Applicability of accumulated Cenvat Credit for duty payment during default period.

Analysis:

1. Interpretation of Rule 8 (3A) of the Central Excise Rules, 2002:
The case involved a dispute regarding the interpretation of Rule 8 (3A) of the Central Excise Rules, 2002. The Revenue contended that the rule required payment of Central Excise duty in cash during a default period, without utilizing the accumulated Cenvat Credit. However, the appellant argued that various High Courts had declared this rule as ultra vires. The Tribunal considered the decisions of different High Courts and noted that the Jurisdictional High Court at Calcutta had declared the rule invalid. The Tribunal emphasized the importance of following binding decisions of the High Court until set aside by a higher authority, stating that it was not open for the Tribunal to disregard such decisions. Consequently, the Tribunal relied on the decision of the Calcutta High Court and concluded that there was no restriction on using Cenvat Credit for duty payment during a default period.

2. Validity of demanding payment of Central Excise duty in cash during default period:
The Revenue had issued a Show-Cause Notice demanding payment of Central Excise duty in cash during a default period, despite the appellant utilizing the Cenvat Credit for duty payment. The appellant argued that such demand was not valid based on the decisions of various High Courts. The Tribunal considered the arguments presented by both sides and highlighted the importance of upholding the decisions of the High Court until overturned. The Tribunal concluded that there was no legal impediment to using the accumulated Cenvat Credit for duty payment during a default period, thereby setting aside the impugned order and allowing the appeal.

3. Applicability of accumulated Cenvat Credit for duty payment during default period:
The crux of the issue revolved around whether the accumulated Cenvat Credit could be utilized for payment of Central Excise duty during a default period. The appellant contended that the rule restricting the use of Cenvat Credit during default had been declared invalid by various High Courts. The Revenue, however, argued that the issue was sub judice before the Supreme Court. The Tribunal, after considering the precedents and the binding nature of High Court decisions, relied on the decision of the Calcutta High Court and held that there was no prohibition on using the Cenvat Credit for duty payment during a default period. Consequently, the Tribunal allowed the appeal and set aside the duty demand along with interest and penalty, emphasizing the importance of respecting binding legal precedents.