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2019 (9) TMI 110 - AT - Central ExciseDefault for payment of Central Excise duty - vires of Rules 8 (3) 8 (3A) of the Central Excise Rules, 2002 - bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period or not - HELD THAT - There is no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise Duty even during default period - reliance placed in the case of Gujarat High Court in Indsur global Ltd. V. Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT and has held the portion of rule 8 (3A) as ultra vires. In the result, the impugned order is set aside and the appeal is allowed with consequential benefits, if any.
Issues:
Interpretation of Rule 8 (3A) of the Central Excise Rules, 2002 regarding payment of Central Excise duty during default period using cenvat credit. Analysis: The judgment pertains to a case where the appellant, a manufacturer of excisable goods, utilized cenvat credit for discharging part of their duty liability during 2012-13 & 2013-14. However, the balance amount, which needed to be paid in cash, was not paid by the due date, resulting in default for payment of Central Excise duty. The Revenue contended that during the default period, duty on goods cleared on consignment basis should have been paid in cash without using the cenvat credit. A Show-Cause Notice was issued, and upon adjudication, duty demand along with interest and a penalty were imposed. The Commissioner (Appeals) upheld the order, leading to the appeal before the Tribunal. The appellant argued that Rule 8 (3A) of the Central Excise Rules, 2002, under which the duty demand was raised, had been declared ultra vires by various High Courts. They cited multiple decisions supporting this argument. The appellant contended that there was no prohibition on using accumulated cenvat credit for paying Central Excise duty during the default period, based on the decisions of the High Courts. The Revenue acknowledged that the issue of Rule 8 (3A) had been decided against them by various High Courts, but they had challenged these decisions in the Supreme Court. The Supreme Court had admitted the Special Leave Petitions (SLP) and stayed the operation of the High Court decisions. Therefore, the Revenue requested to keep the issue pending until the Supreme Court's final decision. After considering the arguments and examining the decisions cited by the appellant, the Tribunal noted that the Jurisdictional High Court at Calcutta had declared a portion of Rule 8 (3A) as ultra vires. Following this precedent, the Tribunal concluded that there was no restriction on using accumulated cenvat credit for paying Central Excise duty even during the default period. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential benefits. In conclusion, the Tribunal's judgment clarified the interpretation of Rule 8 (3A) of the Central Excise Rules, 2002, allowing the use of accumulated cenvat credit for discharging Central Excise duty during a default period. The decision was based on the jurisprudence of various High Courts, including the Jurisdictional High Court at Calcutta, and provided relief to the appellant in this case.
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