9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (4) TMI 15 - AT - Central ExciseDemand under Rule 8(3A) - whether appellants have not paid central excise duty on consignment basis during default period and also utilized cenvat credit for payment of duty against the provisions of Rule 8 (3A) of CER? - Held that - The Hon ble High Court of Madras in the recent judgement in the case of Malladi Drugs & Pharmaceuitcals Ltd. Vs UOI (2015 (5) TMI 603 - MADRAS HIGH COURT ) and A.R. Metallurgicals Pvt. Ltd. (2015 (5) TMI 661 - MADRAS HIGH COURT ) decided batch of writ petitions and struck down Rule 8(3A) as ultra vires and allowed the writ petitions of assessees. Thus we hold that demand of duty under Rule 8(3A) is unsustainable as the said Rule has been struck down by the Hon ble High Court and the demand of duty and penalty imposed in the impugned orders is liable to be set aside. - Decided in favour of assessee
Issues Involved:
1. Demand under Rule 8(3A) of Central Excise Rules, 2002. 2. Validity of utilizing CENVAT credit during default period. 3. Constitutional validity of Rule 8(3A) of Central Excise Rules, 2002. 4. Imposition of penalty under Rule 25 of Central Excise Rules, 2002. Issue-wise Detailed Analysis: 1. Demand under Rule 8(3A) of Central Excise Rules, 2002: The appellants, manufacturers of cotton yarn and man-made staple fiber yarn, were required to pay excise duty on a fortnightly basis. They were issued Show Cause Notices (SCNs) for defaulting in duty payments and were subsequently demanded to pay the outstanding duty along with interest and penalties. The adjudicating authority confirmed these demands and imposed penalties. On appeal, the Commissioner (Appeals) upheld the demands but reduced the penalties in one case. 2. Validity of utilizing CENVAT credit during default period: The appellants argued that the demand under Rule 8(3A) was invalid as the rule had been struck down by the Hon'ble High Courts. They cited judgments from the Gujarat High Court and the Madras High Court, which declared the condition of paying duty without utilizing CENVAT credit as unconstitutional. The adjudicating authority had invoked Rule 8(3A) along with other rules and allowed re-credit of CENVAT where duty was paid in PLA. 3. Constitutional validity of Rule 8(3A) of Central Excise Rules, 2002: The Hon'ble High Courts of Gujarat and Madras had struck down Rule 8(3A) as unconstitutional, arbitrary, and violative of Article 14 of the Constitution. The courts held that the rule's requirement to pay duty without utilizing CENVAT credit was contrary to the scheme of availment of CENVAT credit and constituted an arbitrary denial of a legitimate right that had accrued to the assessee. 4. Imposition of penalty under Rule 25 of Central Excise Rules, 2002: The penalties imposed under Rule 25 were challenged and subsequently, the Hon'ble Madras High Court set aside the Tribunal's Final Order, following the Gujarat High Court's reasoning that the statutory basis for issuing SCNs and raising tax demands was invalid. Consequently, all proceedings initiated under Rule 8(3A) were set aside, and the penalties were deemed unsustainable. Conclusion: The Tribunal, after hearing both sides, found that the issue revolved around the appellants' non-payment of central excise duty during the default period and the utilization of CENVAT credit against Rule 8(3A). Given the rulings of the Hon'ble High Courts, which struck down Rule 8(3A) as unconstitutional, the Tribunal held that the demand of duty and penalties under this rule were unsustainable. The appeals were allowed with consequential relief, setting aside the impugned orders. Operative Part: The Tribunal pronounced the operative part of the order in the open court, allowing the appeals and granting consequential relief to the appellants.
|
