2017 (10) TMI 611 - AT - Central Excise

CENVAT credit - appellant failed to pay duty from their PLA account - invocation of provisions of Rule 8(3A) of the CER 2002, justified or not? - Held that - reliance placed in the case of M/s Space Telelink Ltd. 2016 (3) TMI 1261 - DELHI HIGH COURT , where the order of the Gujarat High Court in Indsur Global Ltd. v. Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT has been stayed - the demand u/r 8(3A) of CER, 2002 is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against duty demanded under Rule 8(3A) of the Central Excise Rules, 2002.
- Applicability of Rule 8(3A) in the case.
- Interpretation of previous judgments regarding Rule 8(3A).

Analysis:

The appellant appealed against an order demanding duty under Rule 8(3A) of the Central Excise Rules, 2002. The appellant had defaulted in paying duty from their PLA account, leading to a demand for duty, interest, and penalty. The appellant had not paid duty on time for several months, leading to the invocation of Rule 8(3A) which restricts the utilization of Cenvat credit in such cases. The appellant contested the demand, leading to adjudication confirming the duty, interest, and penalty. The impugned order required the appellant to pay duty in cash during the period in question and allowed for the credit of the same, reducing the penalty.

The main issue before the tribunal was the applicability of Rule 8(3A) in the present case. Reference was made to a judgment by the Hon'ble High Court of Gujarat in the case of Indsur Global Ltd., where it was held that Rule 8(3A) was ultra vires. Although this decision was challenged and stayed by the Hon'ble Apex court, the Hon'ble High Court of Delhi in the case of M/s Space Telelink Ltd. observed that the stay did not nullify the reasoning of the judgment. The tribunal noted that the impugned order was in line with the decisions of various High Courts and dismissed the appeals accordingly.

Based on the judgment of the Hon'ble High Court of Delhi in the case of M/s Space Telelink Ltd., the tribunal held that the demand under Rule 8(3A) of the Central Excise Rules, 2002 was not sustainable against the appellant. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. The tribunal's decision was influenced by the interpretation of previous judgments regarding the applicability and validity of Rule 8(3A) in similar cases.