2024 (2) TMI 955 - AT - Central Excise

Contravention of provisions of Rule 8(3A) of the Central Excise Rules, 2002 - liability of penalty under Rule 25 of the said Rules read with Section 11AC of the Central Excise Act, 1944 - assessee has continued to clear excisable goods availing the facility of duty payment on installment basis not resorting to consignment-wise payment of duty from Account Current - HELD THAT - The question involved in the matter, is no more res integra and has been decided by this tribunal in the case of PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. 2017 (3) TMI 1599 - DELHI HIGH COURT , M/S. SUPERMAX PERSONAL CARE PVT. LTD. VERSUS COMMISSIONER OF CE ST, LTU, MUMBAI 2022 (7) TMI 920 - CESTAT MUMBAI and ANDHRA CYLINDERS PVT LTD, NALIN KHARA, MANAGING DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD I 2020 (1) TMI 189 - CESTAT HYDERABAD where it was held that Undisputedly appellants have paid the defaulted duty for the month of January 2013, by making a debit entry in the CENVAT Account on 26.03.2013. Even if this debit was to be considered as not a valid payment of duty, then also the Appellant could not have been proceeded against for the clearances made after 26.03.2013, in terms of Rule 8 (3A). 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 , 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. This order of the Hon ble High Court has not been stayed by the Hon ble Supreme Court. As the Appellants have made good the shortfall in duty along with interest and there is no outstanding liability on account of shortfall in duty payments, the fact that various High Courts including the Calcutta High Court have held Rule 8(3A) of the Central Excise Rules as ultra vires, there are no merit in the Department s plea of subjecting the appellant to any penal consequences - the impugned order imposing penalty under Rule 25 of the Central Excise Rules read with Section 11AC cannot be thus sustained and the Appeal therefore is required to be allowed. Appeal allowed.

Summary

Issues involved:
The judgment involves contravention of Rule 8(3A) of the Central Excise Rules, 2002 leading to penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944.

Summary:
1. The Appellant, engaged in manufacturing excisable goods, is alleged to have contravened Rule 8(3A) of the Central Excise Rules, 2002, making them liable for penalty.
2. Two Show Cause Notices were issued for contraventions involving duty payment on an installment basis without consignment-wise payment, which the Appellant rectified by paying the outstanding dues.
3. The tribunal referred to various cases where High Courts have declared Rule 8(3A) as ultra vires, leading to the decision to set aside the demand and penalties imposed on the Appellant.
4. The Calcutta High Court's ruling in a similar case emphasized that Revenue cannot take a stand contrary to judgments declaring Rule 8(3A) as invalid, which was upheld by the tribunal.
5. Following the jurisdictional High Court's decision, the tribunal set aside the penalty imposed on the Appellant due to the absence of outstanding liability and the invalidity of Rule 8(3A).

This judgment highlights the importance of adhering to legal provisions and the impact of High Court rulings on the interpretation and application of rules in excise matters.