2023 (6) TMI 1193 - AT - Central Excise

Default in making fortnightly payment - facility of paying duty fortnightly under the provisions of Rule 173G(1) was withdrawn from the Appellant - duty not paid in terms of Rule 8 of Central Excise Rules, 2002 - revenue neutrality - HELD THAT - The impugned orders were passed by the Ld. Adjudicating authority on 28.02.2013. Whereas the Hon ble Gujarat High Court decision in the matter of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT decided on 27.11.2014. Therefore, the matter is remanded to the adjudicating authority to decide the case afresh in view of the Hon ble Gujarat High Court s decision in the case of Indsur Global Limited after giving an opportunity of personal hearing to the appellant - All the appeals are allowed by way of remand to the adjudicating authority.

Summary

Issues involved: Appeal against Order-in-Original regarding duty payment default and utilization of Cenvat Credit.

Summary:

Issue 1: Default in making fortnightly duty payments and utilization of Cenvat Credit.
The appellant defaulted in making fortnightly duty payments, leading to withdrawal of the facility under Rule 173G(1). The appellant started paying duty consignment wise from Cenvat credit account, which was not in compliance with Rule 8 of Central Excise Rules, 2002. Show cause notices were issued for recovery of duty against payments made through Cenvat Credit. The appellant contested the recovery based on the declaration of Rule 8(3A) as ultra vires by the Gujarat High Court in a previous case.

Issue 2: Utilization of Cenvat Credit for defaulted duty payment.
The appellant argued that Cenvat credit accrued after the default period could be used for payment of defaulted duty. They cited relevant judgments and a Board Circular to support their claim. The appellant contended that even if required to pay the differential duty in cash, the amount already paid through Cenvat credit would become refundable in cash, making the exercise revenue-neutral.

Judgment:
After considering the arguments, the Tribunal noted that the impugned orders were passed before the Gujarat High Court's decision on the ultra vires nature of Rule 8(3A). Therefore, the matter was remanded to the adjudicating authority for fresh consideration in light of the Gujarat High Court's ruling, with an opportunity for the appellant to be heard.

Conclusion:
All appeals were allowed by remanding the matter to the adjudicating authority for a fresh decision based on the Gujarat High Court's judgment regarding the utilization of Cenvat Credit for duty payment defaults.