2019 (10) TMI 164 - AT - Central Excise

Default for payment of Central Excise duty - Revenue was of the view that during the default period the appellant assessee was required to make payment of Central Excise duty on goods cleared on consignment to consignment basis only in cash without making use of the credit accumulated in cenvat credit account - Rules 8 (3) 8 (3A) of the Central Excise Rules 2002. HELD THAT - The provisions of Rule 8 (3A) of the Central Excise Rules 2002 based on which the demand for duty has been raised by the Department has been struck down by the various High Courts as ultra vires as held in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT - I am inclined to follow the decision of jurisdictional High Court of Calcutta in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT which has not been stayed and has a binding force as on date. 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 while taking note of the fact that the decision in Indsur Global has been stayed observed that the Revenue cannot take a stand contrary to that taken in other High Courts and accordingly declared the rule to be invalid. Thus there is no bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period. Appeal allowed.

Summary

Issues:
- Interpretation of Rule 8 (3A) of the Central Excise Rules, 2002 regarding payment of Central Excise duty during default period using Cenvat Credit
- Validity of demand for duty payment in cash during default period
- Applicability of High Court decisions striking down Rule 8 (3A)
- Jurisdictional High Court's decision binding on all authorities within the State
- Tribunal's obligation to follow binding precedents

Analysis:

The judgment concerns the interpretation of Rule 8 (3A) of the Central Excise Rules, 2002, regarding the payment of Central Excise duty during a default period using Cenvat Credit. The appellant, a manufacturer of excisable goods, faced a demand for duty payment in cash during a default period when the balance amount was not paid on time. The Revenue contended that duty should be paid in cash during default, not utilizing the accumulated Cenvat Credit. The Show-Cause Notice proposed duty payment in cash, leading to a confirmed duty demand, interest, and a penalty. The Commissioner (Appeals) upheld the order, prompting the appeal before the Tribunal.

The Tribunal analyzed various High Court decisions, including the Jurisdictional High Court's ruling in a similar case, which declared Rule 8 (3A) invalid. The Tribunal referred to decisions such as Indsur Global Ltd. v. Union of India and Precision Fasteners Ltd. v. CCE, highlighting that there is no restriction on using Cenvat Credit for duty payment during a default period. The Tribunal noted that the Revenue challenged these decisions in the Supreme Court, but until a final decision is reached, the Tribunal should abide by the High Court rulings.

Emphasizing the binding nature of the Jurisdictional High Court's decision, the Tribunal cited the Bombay High Court's stance on following precedent to maintain certainty and uniformity in the law. The Tribunal reiterated that until a decision is overturned by a higher authority, all state authorities must adhere to it. The Tribunal concluded that based on the binding High Court decision, there is no prohibition on utilizing accumulated Cenvat Credit for Central Excise duty payment during a default period. Consequently, the impugned order was set aside, and the appeal was allowed, following the precedent set by the Jurisdictional High Court.

In summary, the judgment clarifies the legality of using Cenvat Credit for duty payment during a default period, based on High Court decisions and the principle of following binding precedents to ensure consistency and adherence to the law.