2018 (12) TMI 1102 - AT - Central Excise

Default in making payment of duty - vires of Rule 8 (3A) of the CER, 2004 - denial of utilization of cenvat credit account for payment of duty - Held that - The provision of Rule 8 (3A) of CER, 2004 has been declared ultra virus by the Hon ble Gujarat High Court in the case of Indsur Global Ltd. Vs. Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT and the said order has been stayed by the Hon ble Apex Court, but, considering the said situation this Tribunal in the case of R.B. Industries vs. CCE-Delhi-IV 2017 (10) TMI 611 - CESTAT CHANDIGARH has held that the demand are not sustainable. The provision of Rule 8 (3A) of CER, 2002 has been declared ultra virus, therefore, the proceedings against the appellant are not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Contravention of Rule 8 (3A) of CER, 2002 - Demand of duty confirmed.
2. Utilization of cenvat credit account for payment of duty during a default period.
3. Validity of Rule 8 (3A) of CER, 2002 following judicial decisions.

Analysis:
1. The appellant appealed against an order confirming the demand of duty due to contravention of Rule 8 (3A) of CER, 2002, wherein duty was required to be paid in cash during a specific period instead of utilizing cenvat credit. The appellant defaulted in duty payment for 20 days in January 2013, using cenvat credit for payment. A show cause notice alleged improper use of cenvat credit during the default period, leading to confirmation of demand, interest, and penalty imposition.

2. The Tribunal considered the judicial stance on the validity of Rule 8 (3A) of CER, 2002. Referring to the Hon'ble Gujarat High Court's decision in Indsur Global Ltd. Vs. Union of India and its stay by the Apex Court, the Tribunal cited a related case, R.B. Industries vs. CCE-Delhi-IV, where it was held that demands based on the now-declared ultra vires provision are unsustainable. Relying on the High Court of Delhi's decision in M/s Space Telelink Ltd, the Tribunal concluded that the proceedings against the appellant were not sustainable due to the ultra vires nature of Rule 8 (3A) of CER, 2002.

3. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief. By declaring the provision ultra vires, the Tribunal invalidated the demand based on Rule 8 (3A) of CER, 2002, in alignment with the judicial precedents cited. The decision highlighted the importance of judicial interpretations in determining the legality and sustainability of demands based on specific statutory provisions.