2023 (11) TMI 464 - AT - Central Excise

Bar in utilisation of CENVAT Credit for payment of Central Excise Duty - default in making monthly payment of duty under Rule 8 of Central Excise Rules, 2002 - Constitutional validity of Rule 8 of CER - HELD THAT - The said Rule has been struck down by the Hon ble Gujarat High Court, Bombay High Court and P H High Court. Following the implications of the said judgment, this Tribunal in INDUS TROPICS LTD VERSUS C.C.E. S.T. -RAJKOT 2023 (3) TMI 950 - CESTAT AHMEDABAD held It was held in ANDHRA CYLINDERS PVT LTD, NALIN KHARA, MANAGING DIRECTOR VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD I 2020 (1) TMI 189 - CESTAT HYDERABAD 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 THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS NASHIK II COMMISSIONERATE VERSUS M/S. NASHIK FORGE PVT. LTD. 2018 (9) TMI 1582 - BOMBAY HIGH COURT holding that the ratio of the judgment of the Hon'ble High Court of Madras, Gujarat and Punjab Haryana apply. The impugned order is set aside and the appeal is allowed.

Summary

Issues involved: Determination of demand against the appellant for default in making monthly payment of duty under Rule 8 of Central Excise Rules, 2002.

Summary:
The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise, Bangalore, regarding default in duty payment by the appellant. The appellant, engaged in manufacturing excisable goods, availed CENVAT credit but defaulted in duty payment for May 2008. A demand of Rs.74,26,040/- was held recoverable along with interest and penalty. The appellant contended that Rule 8(3A) of Central Excise Rules, 2002 had been struck down by various High Courts as ultra vires. The Tribunal, following similar judgments, set aside the demand and penalties imposed, as the rule was deemed unsustainable. The appeal was allowed with consequential relief, if any, as per law.

The appellant had paid the differential amount and interest, but the demand was still held against them. The Tribunal considered the legality of the demand based on the struck down Rule 8(3A) of Central Excise Rules, 2002. The Tribunal noted that multiple High Courts had invalidated the rule, and appeals against these judgments were pending before the Supreme Court. The Tribunal followed the decision of the High Courts and held the demand as unsustainable, setting it aside along with the penalties imposed on the appellant.

In conclusion, the Tribunal agreed with the decision in a similar case and set aside the impugned order, allowing the appeal with any consequential relief as per law. The judgment highlighted the inconsistency regarding the validity of Rule 8(3A) of Central Excise Rules, 2002, across different High Courts and emphasized the importance of following established legal precedents in such matters to ensure fairness and consistency in decisions.