2023 (3) TMI 950 - AT - Central Excise

Vires of Rule 8(3A) of the Central Excise Rules, 2002 - Default in payment of amount of central excise duty along with interest - amount stands deposited with a delay of few weeks - Department is of the view that as per the provisions of Rule 8(3A) of Central Excise Rules, 2002, the appellant should have paid the entire delayed payment of Rs. 1,41,36,316/- in cash rather than same being paid by utilizing Cenvat credits. HELD THAT - The matter has been decided by this tribunal in the case of PRINCIPAL COMMISSIONER OF C. EX., DELHI-I VERSUS SPACE TELELINK LTD. 2017 (3) TMI 1599 - DELHI HIGH COURT , M/S. SUPERMAX PERSONAL CARE PVT. LTD. VERSUS COMMISSIONER OF CE ST, LTU, MUMBAI 2022 (7) TMI 920 - CESTAT MUMBAI and ANDHRA CYLINDERS PVT LTD, NALIN KHARA, MANAGING DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD I 2020 (1) TMI 189 - CESTAT HYDERABAD - It was held in M/s. ANDHRA CYLINDER that What needs to be decided in this factual matrix is where there are judgments by four different High Courts holding Rule 8(3A) as ultra vires and there is no judgment of any High Court upholding it and where the appeals against these judgments have been admitted and are under consideration of the Hon'ble Apex Court, whether the ratio of these judgments bind this tribunal or otherwise. We find that the last in the series of judgments was passed by the Hon'ble High Court of Bombay in the case of Nashik Forge Pvt Ltd on 17.09.2018 holding that the ratio of the judgment of the Hon'ble High Court of Madras, Gujarat and Punjab Haryana apply. Since the given facts of the appeal are identical to the one which has been decided by the above mentioned order, appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the payment of central excise duty by a company for the months of October 2011 to July 2012, specifically focusing on the utilization of CENVAT credit and cash payments.

Details of the Judgment:

Issue 1: Alleged failure to pay full amount of central excise duty
The appellant, a company engaged in the manufacture of excisable goods, was found to have failed to pay the full amount of central excise duty for the months of October 2011 to July 2012. The department alleged that the appellant cleared finished goods valued at Rs. 13,29,26,801/- for home consumption, on which central excise duty amounting to Rs. 1,47,38,289/- was payable. The appellant paid a portion of this duty using CENVAT credit and the remaining balance in cash from their PLA account. A show cause notice was issued, leading to an order confirming the demand of central excise duty against the appellant.

Issue 2: Interpretation of Rule 8(3A) of Central Excise Rules, 2002
The department contended that the appellant should have paid the entire default amount in cash as per Rule 8(3A) of the Central Excise Rules, 2002. However, the tribunal referred to previous cases where the vires of Rule 8(3A) were challenged. High Courts in various cases had struck down the constitutional validity of Rule 8(3A), and appeals against these decisions were pending before the Supreme Court. The tribunal followed the precedent set by these cases and held that the demand for payment was unsustainable, setting aside the penalties imposed on the appellant.

Conclusion:
Considering the legal precedents and the constitutional validity of Rule 8(3A) under scrutiny, the tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellant. The decision was pronounced in the open court on 22.03.2023, aligning with the judgments from previous cases challenging the same legal issue.