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2021 (2) TMI 110 - AT - Central ExciseApplicability of Rule 8(3A) of the Central Excise Rules, 2002 - Levy of penalty - default in the payment of Central Excise Duty - Revenue was of the view that during the default period, the appellant was required to make payment of Central Excise duty on consignment to consignment basis, in cash, without making use of the credit accumulated in Cenvat account, on the removals of excisable goods made during 05.02.2008 to 11.03.2008 - HELD THAT - The jurisdictional High Court at Calcutta, in the case of Goyal MG Gases Pvt.Ltd. 2017 (8) TMI 1515 - CALCUTTA HIGH COURT has followed the decision of the Gujarat High Court in Indsur Global Ltd. vs. UOI 2014 (12) TMI 585 - GUJARAT HIGH COURT and has held the portion of Rule 8(3A) as ultra vires. Thus, there is no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise duty even during default period - appeal allowed - decided in favor of appellant.
Issues:
- Upholding order of learned Commissioner(Appeals) except modification for imposition of penalty - Default in duty payment for clearances made by the appellant - Non-payment of defaulted duty amount within 30 days of the due date - Making clearances without payment of consignment-wise duty - Imposition of penalty under Rule 26 instead of Rule 25 - Applicability of Rule 8(3A) of the Central Excise Rules, 2002 - Various High Court decisions striking down Rule 8(3A) as ultra vires - Jurisdictional High Court's decision on the matter - Challenge by Revenue against High Court decisions in Supreme Court - Stay on High Court decisions by Supreme Court Analysis: The appeal was filed against the Order-in-Appeal upholding the order of the adjudicating authority with a modification in penalty imposition. The appellant, a manufacturer of excisable goods, defaulted in duty payment for clearances made, leading to non-payment of the due amount within 30 days. Additionally, the appellant continued making clearances without paying consignment-wise duty, resulting in default in Central Excise Duty payment. The Revenue contended that during the default period, duty should have been paid in cash without using accumulated Cenvat Credit. The issue of penalty imposition was modified from Rule 25 to Rule 26 by the Commissioner(Appeals), leading to the appeal before the Tribunal. The appellant argued that Rule 8(3A) of the Central Excise Rules, 2002, under which the duty demand was raised, had been declared ultra vires by various High Courts. Referring to multiple decisions, the appellant contended that there was no restriction on using accumulated Cenvat Credit for duty payment even during a default period. On the other hand, the Revenue mentioned that High Courts had ruled against them but had challenged these decisions in the Supreme Court, which had stayed the operation of the High Court judgments. Thus, they requested to keep the issue pending until the Supreme Court's decision. After hearing both sides and examining the High Court decisions, the Tribunal noted that the jurisdictional High Court had deemed a portion of Rule 8(3A) as ultra vires, following the Gujarat High Court's decision. Consequently, the Tribunal concluded that there was no prohibition on utilizing accumulated Cenvat Credit for Central Excise duty payment during a default period. As a result, the impugned order was set aside, and the appeal was allowed.
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