2019 (8) TMI 76 - AT - Central Excise

Default in payment of duty - vires of Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT - The Division Bench of Delhi Tribunal in the case of GEI Industrial System Ltd. 2016 (11) TMI 227 - CESTAT NEW DELHI after considering the various decisions of the High Courts and also the fact that the Supreme Court has granted a Stay Order in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT , has come to the conclusion that the ratio adopted by the various High Courts and by the Tribunal in similar set of facts is still binding and has allowed the appeal of the assessee. Appeal allowed - decided in favor of appellant.

Summary

Issues: Violation of Rule 8(3A) of the Central Excise Rules, 2002

Detailed Analysis:

Issue: Violation of Rule 8(3A) of the Central Excise Rules, 2002

The case involved an appeal against an order passed by the Commissioner (Appeals) dismissing the appellant's appeal. The appellant, engaged in manufacturing gears and gearboxes, was found to have not paid central excise duty for certain periods but had availed CENVAT credit. A demand of ?15,69,670 was confirmed along with interest and a penalty. The appellant contended that the impugned order did not appreciate the facts and law properly. The appellant argued that payment of duty through CENVAT credit was lawful, citing various Tribunal decisions and the unconstitutionality of Rule 8(3A) as held by several High Courts. The appellant relied on judgments such as Indsur Global Ltd. vs. Union of India and Malladi Drugs & Pharmaceuticals Ltd. vs. Union of India to support their case.

The Assistant Commissioner defended the order, stating that the appellant violated Rule 8(3A) and the demand was rightly confirmed. The Assistant Commissioner mentioned that the decision in Indsur Global Ltd. had been challenged in the Supreme Court, which had granted a stay order. Additionally, the Assistant Commissioner referred to the case of Alphine Pharmaceuticals vs. Commissioner of C.Ex., Hyderabad.

After considering the submissions and relevant case laws, the Judicial Member found that the Division Bench of the Delhi Tribunal, in the case of GEI Industrial System Ltd., had concluded that the ratio adopted by various High Courts and the Tribunal in similar cases was binding. The Judicial Member also noted that the Supreme Court had granted a stay order in the case of Indsur Global Ltd. Based on these findings, the Judicial Member allowed the appeal of the appellant, setting aside the impugned order and providing consequential relief, if any. The decision was pronounced in open court on 29/07/2019.