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2019 (4) TMI 1338 - AT - Central ExciseBar 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.
Issues:
1. Failure to pay Central Excise duty on consignment basis. 2. Validity of Rule 8(3A) of the Central Excise Rules, 2002. 3. Applicability of accumulated Cenvat Credit for payment during default period. 4. Imposition of interest and penalty by the Revenue. Analysis: 1. The case involves the failure of the Respondent to pay Central Excise duty from their PLA on consignment basis without utilizing the cenvat credit at the time of clearance of excisable goods. The Revenue alleged a default in payment, leading to a demand of ?12,95,656/- along with interest and a penalty of ?5,000/- under Rule 27 of Central Excise Rules, 2002. The lower appellate authority upheld the decision, prompting the Revenue to appeal before the Tribunal. 2. The key issue addressed by the Tribunal was the validity of Rule 8(3A) of the Central Excise Rules, 2002, which formed the basis for the demand raised by the Revenue. The Tribunal noted that various High Courts had declared this rule as ultra vires, citing precedents such as Indsur Global Ltd. v. Union of India and other relevant cases. This legal position influenced the Tribunal's decision. 3. The Tribunal, after considering the decisions of the Jurisdictional High Court and the striking down of Rule 8(3A), concluded that there was no prohibition on utilizing accumulated Cenvat Credit for making payment of Central Excise Duty even during a default period. This interpretation aligned with the judicial precedents and legal principles established by the High Courts, providing a basis for the Tribunal's ruling. 4. Consequently, the Tribunal found no justification for ordering the payment of interest or penalty as requested by the Revenue. By following the decision of the Jurisdictional High Court and the legal position on the applicability of Cenvat Credit during default periods, the Tribunal rejected the appeal filed by the Revenue. The judgment emphasized the legal clarity provided by the High Court decisions, leading to the dismissal of the Revenue's claims for interest and penalty. This detailed analysis of the judgment highlights the legal intricacies involved in the case, focusing on the interpretation of relevant rules and precedents to arrive at a reasoned decision.
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