2019 (4) TMI 1260 - AT - Central Excise

Bar on utilization of CENVAT Credit - default in making payment of Central Excise Duty - constitutional validity of Rule 8 (3A) of the Central Excise Rules, 2002 - HELD THAT - The Jurisdictional High Court at Calcutta, in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT has followed the decision of the Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT and has held the portion of rule 8 (3A) as ultra vires. There is no bar in making use of Cenvat Credit in making payment of Central Excise Duty even during default period, in view of the fact that the Rule 8 (3A) ibid which steps otherwise, has been struck down as ultra vires. The portion of the order imposing penalties as well as demand for Central Excise Duty is set aside - appeal disposed off.

Summary

Issues:
1. Default in payment of duty leading to show cause notice.
2. Confirmation of demand, interest, and penalty by Adjudicating Authority.
3. Upholding of Adjudication Order by Lower Appellate Authority.
4. Appellant's submission regarding the payment of outstanding duty and clearance of goods.
5. Interpretation of Rule 8(3A) regarding utilization of Cenvat Credit.
6. Applicability of previous court decisions on the case.

Analysis:
1. The case involved a situation where the appellant, engaged in manufacturing steel products, faced financial crisis leading to default in duty payment for September 2008, resulting in a show cause notice for clearances made in November 2008.
2. The Adjudicating Authority confirmed the demand, imposed interest, and penalty under Rule 25 of the Central Excise Rules, 2002.
3. Upon appeal, the Lower Appellate Authority upheld the Adjudication Order, prompting the appellant to approach the Tribunal.
4. The appellant argued that the outstanding duty for September 2008, along with interest, was paid before the clearance of goods in November 2008, emphasizing that no goods were cleared during the default period.
5. The dispute centered on the interpretation of Rule 8(3A), which prohibits utilizing Cenvat Credit until the outstanding amount is paid. The appellant cited a Tribunal decision supporting their position.
6. The Tribunal referred to previous High Court judgments, including the Jurisdictional High Court at Kolkata, which deemed a portion of Rule 8(3A) ultra vires, allowing the use of Cenvat Credit for duty payment even during a default period. Consequently, the impugned order was set aside, and the appeal was allowed.

This detailed analysis covers the issues of default in duty payment, adjudication, appellate decisions, appellant's submissions, rule interpretation, and the impact of previous court decisions on the case.