2020 (1) TMI 143 - AT - Central Excise

Demand of duty - imposition of penalty invoking Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT - The issue regarding demand of duty and imposition of penalty invoking Rule 8(3A) of Central Excise Rules, 2002 has been decided by the Hon ble High Court of Gujarat as well as Hon ble High Court of Delhi. The Hon ble High Court of Gujarat in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT has declared the said rule ultra-virus - The said order has been seen by the Hon ble Apex Court, however, in terms of the decision of Hon ble High Court of Delhi in the case of PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. 2017 (3) TMI 1599 - DELHI HIGH COURT . The decision of Hon ble High Court of Gujarat in the case of Indsur Global Ltd is binding. The aforesaid demand and interest is set aside. However, the penalty imposed is reduced to ₹ 5000/-only under Rule 27 of the Central Excise Rules, 2002 - appeal allowed in part.

Summary

Issues:
1. Confirmation of demand of duty and imposition of penalty under Rule 8(3A) of Central Excise Rules, 2002.

Analysis:
The appeal filed by M/s Sobti Concast Inc was against the confirmation of demand of duty and imposition of penalty under Rule 8(3A) of Central Excise Rules, 2002. The issue had been previously decided by the Hon’ble High Court of Gujarat and the Hon’ble High Court of Delhi. The Hon’ble High Court of Gujarat, in the case of Indus Global Ltd Vs union of India, had declared Rule 8(3A) ultra vires. This decision was binding as per the decision of the Hon’ble High Court of Delhi in the case of Space Telelink Ltd. The Tribunal also referred to a previous order in the case of Ekam Enterprises where it was held that due to the declaration of Rule 8(3A) as ultra vires by the Hon’ble Gujarat High Court, the demand against the appellant was not sustainable. Consequently, the demand along with interest was set aside.

Regarding the imposition of penalty, it was found that the appellant had misrepresented the fact that the duty had been paid as per GAR-7, which was paid later. As a result, a penalty of ?5,000 was imposed on the appellant under Rule 27 of the Central Excise Rules, 2002. Following the decision of the Tribunal, the demand and interest were set aside, and the penalty imposed was reduced to ?5,000 only. The appeal was partly allowed in these terms.

In conclusion, the Tribunal upheld the decision of the Hon’ble High Court of Gujarat declaring Rule 8(3A) as ultra vires, setting aside the demand and interest, and reducing the penalty imposed on the appellant under Rule 27 of the Central Excise Rules, 2002.