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2017 (11) TMI 1010 - HC - Central ExciseValidity of SCN - SCN premised upon Rule 8(3A) of the CER, 2002 - Held that - Rule 8(3A) of the Central Excise Rules, 2002 is held to be ultra vires Articles 14 and 19(1)(g) of the Constitution of India - petition allowed - decided in favor of petitioner.
Issues involved: Challenge to order-in-original dated January 31, 2017 based on Rule 8(3A) of the Central Excise Rules, 2002.
Analysis: 1. Validity of Rule 8(3A) under Constitution: The petitioners argue that Rule 8(3A) was considered by three different High Courts and found to be ultra vires the Constitution of India. They cite cases such as Indsur Global Ltd. v. Union of India, Malladi Drugs & Pharmaceuticals Ltd. v. Union of India, Sandley Industries v. Union of India, and Shreeji Surface Coatings (P) Ltd. v. Union of India in support of their contention. The Special Leave Petition against Indsur Global Ltd. was admitted by the Supreme Court, which restrained the recovery of the assessed amount. The petitioners seek interim protection until the writ petition is disposed of. 2. Court's Consideration: The Court notes that the petitioner received a show cause notice under Rule 8(3A) of the Central Excise Rules, 2002 in 2010, and had replied to it. Subsequently, three High Courts declared Rule 8(3A) as ultra vires the Constitution. However, the order-in-original dated January 31, 2017, was based on Rule 8(3A) without acknowledging the High Courts' decisions. The Court acknowledges the rulings in Indsur Global Ltd., Malladi Drugs & Pharmaceuticals Ltd., Sandley Industries, and Shreeji Surface Coatings, which found Rule 8(3A) to be ultra vires Articles 14 and 19(1)(g) of the Constitution. 3. Interim Relief: Considering the Supreme Court's restraint on recovery in a similar case, the Court finds a strong prima facie case in favor of the petitioner. The balance of convenience also favors granting relief. Consequently, the Court orders an interim stay on the order-in-original until June 30, 2017, or until further orders, whichever is earlier. The writ petition is listed for further consideration on June 6, 2017.
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