2023 (4) TMI 1192 - AT - Central Excise

Default in payment of duty - constitutional validity of Rule 8(3A) of CCR - Wilful mistake or not - HELD THAT - The issue is no more res integra and is squarely covered by the judgement of the Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT , wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon ble Supreme Court. The Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant - the said judgment has been followed by the Hon ble Calcutta High Court in the case of Goyal MG Gases Pvt. Ltd. v. UOI which is not stayed by the Hon ble Supreme Court. The Hon ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee. The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count. Appeal allowed.

Summary

Issues:
The judgment involves the default in payment of duty for the month of November 2009 and the subsequent dispute regarding the application of Rule 8(3A) of the Central Excise Rules.

Default in Payment of Duty:
The Appellant, engaged in the manufacture of Transformer Oil, made a default in payment of duty for November 2009, which was later rectified by making cash payment. The Appellant had a history of diligently following Central Excise procedures and had no prior instances of non-payment or procedural irregularities.

Application of Rule 8(3A):
The dispute centered around the application of Rule 8(3A) of the Central Excise Rules, which restricted the utilization of Cenvat credit during a period of default. The Appellant argued that a genuine clerical error led to a shortfall in interest payment, which should not be equated with deliberate non-payment of duty. The Appellant contended that the rule should not be applied post the rectification of the interest payment.

Judgment and Rulings:
The Tribunal cited the judgment of the Calcutta High Court in the case of M/s. Goyal MG Gases Pvt. Ltd. Vs. Union of India, which declared Rule 8(3A) as invalid. The Tribunal also referred to the Gujarat High Court's decision in Indsur Global Ltd. v. UOI, which deemed the words "without utilizing Cenvat Credit" under Rule 8(3A) as ultra vires. Following these precedents, the Tribunal held that the demand based on Rule 8(3A) was unsustainable and allowed the appeal.

Conclusion:
The Tribunal set aside the impugned order and ruled in favor of the Appellant, emphasizing that the demand under Rule 8(3A) was not tenable in light of the judicial declarations of its invalidity. The Appellant's appeal was allowed with consequential relief, if any.