2023 (5) TMI 1347 - AT - Central Excise

Contravention of Rule 8(3A) of the Central Excise Rules, 2002 - utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court - HELD THAT - The issue is no more res integra and is squarely covered by the judgement of 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 , wherein it is 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 which is not stayed by the Hon ble Supreme Court. The Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant. The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count. Appeal allowed.

Summary

Issues involved:
The issue involves the contravention of Rule 8(3A) of the Central Excise Rules, 2002 by the appellant, leading to a demand for duty payment and imposition of penalty.

Summary:

Issue 1: Contravention of Rule 8(3A) of Central Excise Rules, 2002

The appellant, engaged in manufacturing rubber products, availed full duty exemption up to a certain value but failed to pay duty when the value exceeded the threshold. The department alleged deliberate contravention of Rule 8(3A) by not discharging consignment-wise duty liability from their account, instead using CENVAT credit. The adjudicating authority confirmed a demand for duty along with interest. The first appellate authority imposed a penalty under Rule 25(1)(a) of the Central Excise Rules, 2002. The appellant contended they paid duty from PLA with interest and had no malicious intent for late payment. The Tribunal referred to judgments by the Calcutta High Court and Gujarat High Court declaring Rule 8(3A) ultra vires and allowing duty payment using CENVAT credit. As Rule 8(3A) was deemed invalid, the demand for contravention of this rule could not be sustained, leading to the appeal's success.

Conclusion:

The Tribunal set aside the impugned order, allowing the appeal and providing consequential reliefs as necessary.