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2018 (9) TMI 1582 - HC - Central ExciseViolation / breach of Rule 8(3A) of the Central Excise Rules, 2002 - vires of Rule 8(3A) of the Central Excise Rules, 2002 - Whether the Tribunal committed substantial error of law by allowing Respondent's appeal without examining the case on merit in spite of charge made out in the notice emphasizing contravention of the provisions of Rule 8(3A) of Central Excise Rules, 2002? - Held that - Once the provision has been declared ultra vires by any High Court then one has to proceed on the basis that the provision which has been declared as unconstitutional is non-existant. Therefore, unless a contrary decision is given by any other competent Court, the Tribunal in the state has to proceed with the decision of the other High Court as it is the law of land and binding upon it. When a provision has been declared unconstitutional by a Court, then the Tribunal is bound to follow it as held by this Court in C.C.E., Mumbai III Vs. Valson Dyeing Bleaching Printing Works 2010 (9) TMI 338 - BOMBAY HIGH COURT , where the Tribunal allowed the Appeal of the Respondent holding that the basis of the proceeding therein was on account of breach of notification No. 42 of 1998 (NT) 10th December, 1998 - Nothing has been shown as to why the decision of our Court in Valson Dyeing should not be followed. Appeal dismissed.
Issues:
Appeal challenging order under Section 35G of the Central Excise Act, 1944; Questions of law regarding Tribunal's decision on Rule 8(3A) of Central Excise Rules, 2002 and Cenvat credit denial; Constitutionality of Rule 8(3A) based on judgments from High Courts of Gujarat, Madras, and Punjab & Haryana; Tribunal's obligation to follow declaration of unconstitutionality by a Court. Analysis: The appeal before the Bombay High Court under Section 35G of the Central Excise Act, 1944 contested the order issued by the Customs, Excise and Service Tax Appellate Tribunal (Tribunal) on 27th January, 2016. The primary issues raised by the Revenue for consideration were related to the Tribunal's decision on the case's merit concerning the contravention of Rule 8(3A) of the Central Excise Rules, 2002, and the denial of Cenvat credit under Rule 8(3A) of Cenvat Credit Rules, 2004. The proceedings against the Respondents were initiated based on the violation of Rule 8(3A) of the Central Excise Rules, 2002, which the Tribunal's order noted had been declared unconstitutional by the High Courts of Gujarat, Madras, and Punjab & Haryana in separate judgments. The Tribunal's decision to allow the Respondent's appeal was based on the unconstitutionality of Rule 8(3A) of the Central Excise Rules, 2002, as determined by the aforementioned High Court judgments. The High Court emphasized the principle that when a provision is declared unconstitutional by a Court, the Tribunal is obligated to follow that declaration, as established in previous cases. The Court cited precedents where the Tribunal had to adhere to the decisions of High Courts declaring specific provisions as ultra vires, making them non-existent in the eyes of the law. The Court highlighted the importance of following the decisions of competent Courts unless a contrary decision is provided, underscoring the binding nature of such judgments on the Tribunal. In light of the above legal principles and precedents, the High Court concluded that the questions posed did not present substantial legal issues. Consequently, the appeal was dismissed, affirming the Tribunal's decision to allow the Respondent's appeal due to the unconstitutionality of Rule 8(3A) of the Central Excise Rules, 2002 as determined by the High Courts of Gujarat, Madras, and Punjab & Haryana.
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