2019 (4) TMI 1337 - AT - Central Excise

Bar on utilization of CENVAT Credit - default in making payment of Central Excise Duty - constitutional validity of Rule 8 (3A) of the Central Excise Rules, 2002 - HELD THAT - The Jurisdictional High Court at Calcutta, in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT has followed the decision of the Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT and has held the portion of rule 8 (3A) as ultra vires. There is no bar in making use of Cenvat Credit in making payment of Central Excise Duty even during default period, in view of the fact that the Rule 8 (3A) ibid which steps otherwise, has been struck down as ultra vires. The portion of the order imposing penalties as well as demand for Central Excise Duty is set aside - appeal disposed off.

Summary

Issues:
1. Interpretation of Rule 8(3A) of the Central Excise Rules, 2002 regarding payment of Central Excise duty.
2. Validity of disallowing cenvat credit and imposing penalties under Rule 25 of the Central Excise Rules, 2002.
3. Applicability of accumulated Cenvat Credit for payment of Central Excise Duty during a default period.

Analysis:
1. The appeal involved a dispute regarding the interpretation of Rule 8(3A) of the Central Excise Rules, 2002. The Revenue contended that the respondent was required to clear finished goods on consignment basis without utilizing Cenvat Credit during a specific period. However, the lower appellate authority set aside the adjudication order based on decisions of various High Courts declaring Rule 8(3A) as ultra vires. The Tribunal noted the decisions of different High Courts and concluded that there was no restriction on using accumulated Cenvat Credit for duty payment during a default period.

2. The adjudicating authority disallowed the cenvat credit of a specific amount along with interest and imposed a penalty under Rule 25 of the Central Excise Rules, 2002. The Commissioner (Appeals) overturned this decision based on precedents from the Hon’ble Gujarat High Court and the Hon’ble High Court of Madras. The Tribunal, after considering the arguments and legal precedents, rejected the justification for ordering payment of interest or penalty by the Revenue.

3. The key issue revolved around the applicability of accumulated Cenvat Credit for payment of Central Excise Duty during a default period. The Tribunal, in line with the decisions of the Jurisdictional High Court and other High Courts, concluded that there was no legal impediment to using the accumulated Cenvat Credit for duty payment even during a default period. Consequently, the appeal filed by the Revenue was rejected, and the Cross Objection was disposed of accordingly.