2023 (3) TMI 689 - AT - Central Excise

Non-payment of Central Excise duty by debiting from the account - contravention of Rule 8(3A) of the Central Excise Rules, 2002 read with Section 11AB of the Central Excise Act, 1944 - HELD THAT - The issue is no more res integra and is squarely covered by the judgement of the Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT , wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon ble Supreme Court. The Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant. The demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count. Appeal allowed.

Summary

Issues:
Appeal against duty demand and penalty for contravention of Rule 8(3A) of Central Excise Rules, 2002 read with Section 11AB of Central Excise Act, 1944 by utilization of Cenvat Credit.

Analysis:

1. The appeal arose from an Order-in-Original confirming duty demand of Rs.1,02,94,904/- for contravention of Rule 8(3A) of the Central Excise Rules, 2002. The appellant allegedly contravened provisions intentionally to evade Central Excise duty. A penalty of Rs.25.00 Lakhs was also imposed under Rule 25 of the Central Excise Rules, 2002.

2. The appellant did not appear, but the Authorized Representative for the Department supported the impugned order.

3. The grounds of appeal by the Appellant claimed that they had already paid the Central Excise duty by debiting their Cenvat Credit account for specific periods. They argued that the demand should not exceed the duty payable on goods cleared during certain periods.

4. The Appellant contended that the demand should not exceed Rs.66,29,105 based on their calculations, challenging the Commissioner's assessment of Cenvat Credit utilized.

5. The Tribunal referred to a judgment by the Hon'ble Calcutta High Court, which declared Rule 8(3A) as invalid, stating that the Revenue cannot take a different stand contrary to such judgments.

6. The Tribunal cited a case from the Hon'ble Gujarat High Court, which declared the words "without utilizing Cenvat Credit" under Rule 8(3A) as ultra vires, allowing duty discharge by utilizing Cenvat Credit, similar to the Appellant's actions.

7. The Tribunal highlighted that the judgments by the Calcutta High Court declared Rule 8(3A) as invalid, and the Revenue must extend parity to the assessee.

8. Given the invalidity of Rule 8(3A) and the Court judgments, the Tribunal concluded that the demand based on contravention of the rule cannot be sustained, leading to the success of the appeal.

9. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential reliefs.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision based on relevant legal principles and precedents.