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TMI Blog2021 (4) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... he clearances for the following months was more than the value on which duty of excise was discharged; that the short paid duty of Rs. 5,73,721/- was paid along with interest on 26.12.2009; that fully built value of model 'Taurus 2516/2' was revised from Rs. 13,27,141 to Rs. 13,40,658/- w.e.f., 03.03.2008; that the respondent had cleared model 'Taurus 2516/2' by adopting value of Rs. 13,27,141/- vide Invoice No.s 458 dt.11.03.2008 to 479 dt.13.03.2008, thereby short paid duty of excise to the tune of Rs. 42,898/- was paid along with interest on 08.10.2009. 5. According to appellant, the respondent was required allegedly to clear the short paid amount pertaining to the month of November, 2006 along with interest by 05.01.2007 as stipulated under Rule 8(3A) of Central Excise Rules, 2002, and the said short paid amount was paid along with interest on 26.12.2009. 6. A show cause notice in OR.No.81/2010- Adjn(CE)(commr.) dt.05.07.2010 for the default period 05.01.2007 to 26.12.2009 was issued asking the respondent as to why : i. Rs. 5,73,721/- towards duty of excise short paid should not be demanded under proviso to sub-section (1) of Section 11A central Excise Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 42,898/- paid by the respondent against the same; iv. ordered for payment of interest at applicable rates under Section 11AB of Central Excise Act, 1944; on the amounts demanded at Sl.No.(i) to (iii) above and appropriated the amount of Rs. 1,57,352/- paid by the respondent against the same; v. ordered for payment of interest at applicable rates under Section 11AB of Central Excise Act, 1944; on the amounts demanded at Sl.No.(ii) above; vi. imposed a penalty of Rs. 6,16,619/- on the respondent under Section 11AC of Central Excise Act, 1944; vii. imposed a penalty of Rs. 10,00,000/- under rule 25 of Central Excise Rules 2002. 8. Aggrieved by the said Order-in-Original, the respondent preferred an Appeal No.E/45/2012 before the CESTAT. 9. The CESTAT by final order No.A/30845/2020 dt.21.02.2020 allowed the appeal of the respondent and set aside the Order-In-Original to the extent it imposed a demand upon the respondent under Rule 8(3A) of the Central Excise Rules, 2002 and penalties under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Rules, 2002. The CESTAT held that: "7. A plain reading of Rule 8(3A) of Central Excise Rules, 2002, makes it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t form the ratio decided. 12. In Indsur Global Ltd's case(2014(310) ELT 833 supra) the Gujarat High Court considered sub-Rule (3A) of Rule 8 of the Central Excise Rules, 2002, which provided that in case of an assessee who has defaulted in payment of duty beyond 30 days from the due date, he has to pay excise duty for each consignment at the time of removal without utilizing the Cenvat Credit till he pays the outstanding amount including interest; and in the event of failure, it would be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in the rules would follow. The Gujarat High Court declared that portion of sub-Rule (3A) of Rule 8, which requires a defaulter to clear the finished products on payment of excise duty without availing the Cenvat Credit as unreasonable and violative of Article 14 of the Constitution of India holding that it amounts to a serious restriction on the assessee's fundamental right to carry on trade or business of his choice which is guaranteed under Article 19(1)(g) of the Constitution of India. 13. It held: "30. ...the reasons for non-payment of excise duty can be manifold and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness in the background of an ordinary assessee who would be hit and targeted by such a provision....... 34. By no stretch of imagination, the restriction imposed under sub-rule (3A) of Rule 8 to the extend it requires a defaulter irrespective of its extent, nature and reason for the default to pay the excise duty without availing Cenvat credit to his account can be stated to be a reasonable restriction. It leads to a situation so harsh and a position so unenviable that it would be virtually impossible for an assessee who is trapped in the whirlpool to get out of his financial difficulties. This is quite apart from being wholly reasonable, being irrational and arbitrary and therefore, violative of Article 14 of the Constitution. It prevents him from availing credit of duty already paid by him. It also is a serious affront to his right to carry on his trade or business guaranteed under Article 19(1)(g) of the Constitution. On both the counts, therefore, that portion of sub-rule (3A) of rule must fail." 14. No doubt, the decision of the Gujarat High Court in Indsur Global Ltd's case(1 supra) was challenged in the Supreme Court by the Union of India and the Supreme Court in SLP( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(3A) applies to cases where the assessee had defaulted in payment of excise duty beyond 30 days from the due date. So, the said rule cannot apply to the instant case and as rightly held by the CESTAT, the said Rule does not apply to every case where in the department, during the scrutiny of returns, during audit or during investigation finds any additional amount payable as duty of excise. Such demands would be recoverable by issuing a notice under Section 11A of the Act and would be covered under Rule 8(3A). 19. The Tribunal has given cogent reasons for its finding that the assessee's case is a case of demand under Section 11A and is not covered by Rule 8(3A) and the Revenue was not correct in denying utilization of Cenvat Credit to the assessee by applying the said sub-rule. 20. In our opinion, the Tribunal rightly set aside the penalty imposed on the respondent and also the demand imposed on the respondent under Rule 8(3A). 21. We also are of the opinion that no substantial question of law arises for consideration in this Appeal. 22. Accordingly, the Appeal is dismissed. No order as to costs. 23. Pending miscellaneous petitions, if any, in this Writ Petition shall sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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