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2023 (10) TMI 1157 - AT - Central ExciseConstitutional Validity of Rule 8 (3A) of the Central Excise Rules, 2002 - bar on use of the credit accumulated in Cenvat Credit in making payment of Central Excise Duty - failure to pay duty involving on goods removed for the months of November December 2006, within the due dates as specified in Rule 8(1) of the Central Excise Rules, 2002 - demand of duty alongwith interest and penalty - HELD THAT - It is found that the provisions of Rule 8 (3A) of the Central Excise Rules, 2002, based on which the demand for duty has been raised by the Department has been struck down by the various High Courts as ultra vires. In this connection, reference can be made for the decisions in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT , M/S. MALLADI DRUGS PHARMACEUTICALS LTD. VERSUS THE UNION OF INDIA, THE COMMISSIONER OF CENTRAL EXCISE 2015 (5) TMI 603 - MADRAS HIGH COURT , M/S SANDLEY INDUSTRIES VERSUS UNION OF INDIA AND OTHERS 2015 (10) TMI 2455 - PUNJAB HARYANA HIGH COURT PRECISION FASTENERS LTD 1 VERSUS COMMISSIONER OF CENTRAL EXCISE 2 2014 (12) TMI 655 - GUJARAT HIGH COURT and M/S A.T.V. PROJECTS INDIA LTD. VERSUS UNION OF INDIA AND OTHERS 2016 (9) TMI 321 - ALLAHABAD HIGH COURT . In view of the above decisions including the decision of the Jurisdictional High Court, there is no bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period. The Jurisdictional High Court at Calcutta, in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT has followed the decision of the Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 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 the default period. In the result, the Impugned Order is set aside - appeal allowed.
Issues involved: Interpretation of Rule 8(3A) of the Central Excise Rules, 2002 regarding the payment of Central Excise Duty using Cenvat Credit during default period.
The judgment addresses the issue of the appellant's failure to pay duty on goods removed within the specified due dates, resulting in a default in the payment of Central Excise Duty. A show cause notice was issued and confirmed by the Adjudicating Authority, imposing a penalty. The Revenue contended that the appellant was required to pay duty in cash without using the accumulated Cenvat Credit. The Commissioner(Appeals) upheld the decision, leading to the appeal before the Tribunal. The respondent Revenue argued that the applicability of Rule 8(3A) has been challenged in various High Courts, with the matter pending before the Supreme Court. The Tribunal noted that the Show Cause Notice was issued under Rule 8(3A) demanding payment in cash, which was already debited from the Cenvat Credit account. The Tribunal observed that Rule 8(3A) has been struck down by several High Courts as ultra vires, allowing the use of Cenvat Credit for duty payment during default periods. The Tribunal referenced decisions from various High Courts and noted that the Jurisdictional High Court at Calcutta followed the Gujarat High Court's ruling in declaring a portion of Rule 8(3A) as ultra vires. Consequently, the Tribunal concluded that there is no prohibition on utilizing accumulated Cenvat Credit for Central Excise Duty payment during default periods. As a result, the Impugned Order was set aside, and the appeal was allowed.
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