2019 (7) TMI 1404 - AT - Central Excise

Validity of SCN - whether SCN dated 3.12.2014 was rightly issued? - Demand u/r 8(3A) of the Central Excise Rules, 2002 - HELD THAT - The stay order of Hon ble Supreme Court was considered by the Hon ble Delhi High Court in PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. 2017 (3) TMI 1599 - DELHI HIGH COURT wherein under the similar facts issue, it has been held that an order keeping in abeyance the judgement of a lower court or authority does not deface the underlying basis of the judgement itself, i.e. its reasoning. The Commissioner (Appeals) has erred in confirming the demand under Rule 8(3A) along with penalty under Rule 25 of Central Excise Rules. There was no default or tax in arrear on the day of issue of show cause notice. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of show cause notice dated 3.12.2014 under Rule 8(3A) of the Central Excise Rules, 2002.
2. Applicability of cenvat credit for payment of duty during the period of default.
3. Imposition of penalty under Rule 25 of the Central Excise Rules, 2002.

Analysis:

Issue 1:
The main issue in this appeal was whether the show cause notice dated 3.12.2014 was rightly issued. The appellant had self-assessed a deficit amount of tax for October 2013, which was subsequently deposited on 9.5.2014 with interest. The Revenue contended that the appellant could not utilize cenvat credit for duty payment during the default period. The show cause notice proposed a demand for cenvat credit utilized during a specific period, with penalties. The Additional Commissioner confirmed a reduced demand but imposed interest and a penalty under Rule 25 of the Central Excise Rules, 2002.

Issue 2:
The appellant argued that the provisions of Rule 8(3A) were ultra vires of constitutional provisions as they did not differentiate between willful defaulters and others. Citing the judgment of the Hon'ble Gujarat High Court and the stay order of the Hon'ble Supreme Court, the appellant contended that the Commissioner (Appeals) erred in confirming the demand and penalty. The Authorized Representative for Revenue supported the Commissioner's decision based on the stay granted by the Hon'ble Supreme Court.

Issue 3:
The Tribunal, after considering the arguments and legal precedents, held that the Commissioner (Appeals) erred in confirming the demand under Rule 8(3A) and imposing a penalty under Rule 25. It was noted that there was no default or tax in arrears on the day of the show cause notice issuance. Therefore, the appeal was allowed, the impugned order was set aside, and the appellant was entitled to consequential benefits as per the law.

This comprehensive analysis of the judgment highlights the legal intricacies involved in the case, including the interpretation of statutory provisions, constitutional validity, and the application of relevant legal precedents.