2023 (5) TMI 237 - AT - Central Excise

Liability to pay excise duty from PLA as against the duty paid from accumulated Cenvat credit when the appellant have defaulted the monthly payment of duty beyond prescribed time limit, in terms of Rule 8(3A) of Central Excise Rules, 2002 - constitutional validity of Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT - In the present case demand of excise duty was made despite the appellant have paid the excise duty from accumulated Cenvat credit. The demand was raised invoking Rule 8(3A) of Central Excise Rules, 2002 which restricts the payment from Cenvat credit in case the assessee defaults monthly duty payment beyond prescribed time-limit. The Hon ble Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT held the Rule 8(3A) as ultra vires. Thus, it is clear that appellant is not barred from making payment of excise duty from accumulated Cenvat credit therefore demand once again from PLA cannot be made - appeal allowed.

Summary

Issues Involved:
1. Whether the appellant is liable to pay excise duty from PLA instead of accumulated Cenvat credit when defaulting on monthly duty payment beyond the prescribed time limit under Rule 8(3A) of Central Excise Rules, 2002.

Summary:

Issue 1: Liability to Pay Excise Duty from PLA vs. Cenvat Credit

The appellant's counsel argued that the entire case was based on Rule 8(3A) of Central Excise Rules, 2002, which has been declared ultra-vires by the Gujarat High Court in the case of Indsur Global Limited vs. UOI - 2014 (310) ELT 833 (Guj.). The appellant cited several judgments supporting this position, such as Precision Fasteners Limited vs. CCE and others.

The appellant also submitted that they had paid interest for the delay in duty payment, making the impugned order unsustainable. The respondent reiterated the findings of the impugned order.

Upon review, the Tribunal noted that the demand for excise duty was made despite the appellant having paid from accumulated Cenvat credit. The demand was raised under Rule 8(3A), which restricts payment from Cenvat credit in case of default beyond the prescribed time limit. However, the Gujarat High Court declared Rule 8(3A) ultra vires, stating that it imposed unreasonable restrictions and was violative of Articles 14 and 19(1)(g) of the Constitution. The court held that the rule created undue hardship by preventing the use of Cenvat credit, which is a right accrued to the assessee for duties already paid.

The Tribunal concluded that the appellant is not barred from making payment of excise duty from accumulated Cenvat credit. Therefore, the demand from PLA cannot be sustained. The Tribunal set aside the impugned order and allowed the appeal, noting that the issue is no more res-integra.

(Pronounced in the open court on 02.05.2023)