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2023 (6) TMI 189 - AT - Central ExciseApplicability of Rule 8 (3A) of Central Excise Rules, 2002 - demand of duty which has already been paid by the appellant by way of utilizing CENVAT Credit at the time of clearance of the goods in the prescribed manner - HELD THAT - The issue is no longer Res Integra and Hon ble Gujrat High Court as in the case of Indsur Globe 2014 (12) TMI 585 - GUJARAT HIGH COURT quashed the said rule, holding that Condition contained in sub-rule (3A) of rule 8 for payment of duty without utilizing the cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional. Therefore, the portion without utilizing the cenvat credit of sub-rule (3A) of rule 8 of the Central Excise Rules, 2002, shall be rendered invalid. Hon ble Bombay High Court has in the case of TWENTY FIRST CENTURY WIRES RODS LTD., AND M/S. SEJAL GLASS LTD. 2019 (6) TMI 683 - BOMBAY HIGH COURT has held Once Rule 8(3A) of the said Rules has been declared as unconstitutional to the extent it prohibited utilizing Cenvat credit, the discharge of payment of duty on the final products, the said provision to the above extent ceases to apply. The Act and the said Rules being all India in its application, the decision rendering a part of it as unconstitutional would equally apply within the State of Maharashtra, in the absence of any contrary view or the appellant showing that the view of the Gujarat High Court in Indsur Global Ltd. is ex-facie unsustainable. In view of the above decisions of Hon ble High Court there are no merits in the impugned orders and the same is set aside - appeal allowed.
Issues Involved:
1. Demand of Differential Central Excise Duty 2. Payment of Interest on Evaded Duty 3. Recovery of Wrongly Utilized Cenvat Credit 4. Imposition of Penalty for Non-Payment of Duty and Wrong Utilization of Cenvat Credit 5. Confiscation of Goods and Imposition of Fine Summary: 1. Demand of Differential Central Excise Duty: The tribunal confirmed the demand of Differential Central Excise duty amounting to Rs. 70,92,658/- from M/s Hatkesh Chemicals & Pharmaceuticals Pvt. Ltd. and Rs. 15,04,418/- from M/s Shree Mantralayam Chemical Industries Pvt. Ltd. under Section 11A(1) of the Central Excise Act, 1944, due to the removal of goods without payment of duty. 2. Payment of Interest on Evaded Duty: The tribunal ordered the payment of interest on the evaded duty under Section 11AB (now Section 11AA) of the Central Excise Act, 1944. The interest amounts already deposited were appropriated towards the interest on the Central Excise duty on the goods removed without payment of duty. 3. Recovery of Wrongly Utilized Cenvat Credit: The tribunal ordered the recovery of wrongly utilized Cenvat Credit amounting to Rs. 1,25,12,073/- from M/s Hatkesh Chemicals & Pharmaceuticals Pvt. Ltd. and Rs. 39,83,840/- from M/s Shree Mantralayam Chemical Industries Pvt. Ltd. under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of Central Excise Act, 1944. 4. Imposition of Penalty for Non-Payment of Duty and Wrong Utilization of Cenvat Credit: Penalties were imposed under Rule 25 and Rule 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. M/s Hatkesh Chemicals & Pharmaceuticals Pvt. Ltd. faced penalties totaling Rs. 1,95,12,073/-, and M/s Shree Mantralayam Chemical Industries Pvt. Ltd. faced penalties totaling Rs. 79,83,840/-. 5. Confiscation of Goods and Imposition of Fine: The tribunal confiscated goods valued at Rs. 23,66,75,947/- from M/s Hatkesh Chemicals & Pharmaceuticals Pvt. Ltd. and Rs. 7,06,83,143/- from M/s Shree Mantralayam Chemical Industries Pvt. Ltd. under Rule 25 of the Central Excise Rules, 2002. Since the goods were already cleared, a fine of Rs. 50 lakhs was imposed on each entity in lieu of confiscation under Section 34 of the Central Excise Act, 1944. Conclusion: The tribunal found the issue of applicability of Rule 8(3A) of Central Excise Rules, 2002, for demanding duty already paid by utilizing CENVAT Credit to be no longer Res Integra, referencing the Hon'ble Gujarat High Court's decision in Indsur Globe. Consequently, the tribunal set aside the impugned orders and allowed the appeals.
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