2021 (7) TMI 1349 - AT - Central Excise

Constitutional Validity of Rule 8 (3A) of the Central Excise Rules, 2002 - Use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period - HELD THAT - The High Court at Calcutta, in the case of Goyal MG Gases Pvt. Ltd 2017 (8) TMI 1515 - CALCUTTA HIGH COURT has followed the decision of the Gujarat High Court in Indsur Global Ltd. V. Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT and has held the portion of rule 8 (3A) as ultra vires. Following the decision of the Hon ble High Court, 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. The Impugned Order is set aside and the appeal is allowed.

Summary

Issues:
Violation of Rule 8(3A) of the Central Excise Rules, 2002 - Applicability of Rule 8(3A) - Admissibility of accumulated Cenvat Credit for duty payment during default period.

Analysis:
The appeal pertains to a case where the appellant, a manufacturer of MS ingots, utilized Cenvat Credit to discharge total duty liability during a specific period. The Department alleged that the appellant failed to pay Central Excise duty properly for certain months, contravening various rules. The Show Cause Notice issued proposed penalties for violation of rules. The Order-in-Original imposed penalties, which were upheld by the Commissioner(Appeals), leading to the current appeal before the Tribunal.

The appellant argued that the provision of Rule 8(3A) of the Central Excise Rules, 2002, under which the duty demand was raised, had been declared ultra vires by various High Courts. Citing multiple decisions, the appellant contended that using accumulated Cenvat Credit for duty payment during a default period should not be restricted.

On the other hand, the Authorized Representative for the Respondent-Revenue acknowledged the conflicting decisions by High Courts but highlighted that the Revenue had challenged those decisions in the Supreme Court. The Supreme Court had admitted the Special Leave Petitions and stayed the operation of the High Courts' decisions. Therefore, the Representative suggested keeping the issue pending until the Supreme Court's final decision.

After hearing both parties and reviewing the cited decisions, the Tribunal noted that the High Court at Calcutta had deemed a portion of Rule 8(3A) as ultra vires, following the Gujarat High Court's decision. Consequently, the Tribunal concluded that utilizing accumulated Cenvat Credit for Central Excise Duty payment during a default period was permissible. As a result, the Impugned Order was set aside, and the appeal was allowed, with the Excise Miscellaneous Application (Stay) filed by the Appellant also being disposed of.