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TMI Blog2024 (8) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... r this reason, 50% of the credit to the tune of Rs. 26,97,256/- has been denied by the Department and the said amount has been confirmed alleging violation of Rule 4(2) of Central Excise Rules, 2002. It is to be noted that even if the appellant is entitled to take only 50% credit in the first financial year, they would be able to take the balance credit in any subsequent year. The error is only with regard to the procedure of taking credit - When the appellant is eligible to take the balance credit in subsequent financial year and has paid the interest and penalty in this regard, the Department ought not to have issued any Show Cause Notice. In any case, it is only a procedural infraction, and the appellant having paid interest as well as the penalty, the demand of duty confirmed along with interest and penalties in this regard requires to be set aside. Demand of duty raised alleging violation of Rule 8(3A) of Central Excise Rules, 2002 - HELD THAT:- 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 ] has held that Rule 8(3A) to be unconstitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty short paid for the month of January 2013, along with interest. They also paid penalty of Rs. 2,68,729/-. The appellant had used the Cenvat credit for payment of the duty even though there was default in payment of duty which is in violation of Rule 8(3A) of Central Excise Rules, 2002. 1.4 A Show Cause Notice dated 03.02.2014 was issued alleging irregular availment of credit on capital goods and violation of provision under Rule 8(3A) of Central Excise Rules, 2002. The Show Cause Notice proposed to demand the duty along with interest and for imposing penalties. After due process of law, the Original Authority confirmed the demand of duty along with interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 2.1 The Ld. Counsel Shri M. Karthikeyan appeared and argued for the appellant. It is submitted that the appellant had transferred their capital goods from Vellore to Ranipet factory on account of shifting of the manufacturing unit. The transfer was effected by raising invoice and paying duty of Rs. 53,94,152/- (including the additional customs duty of Rs. 9,15,692/-). On receipt of the capital goods in the Ranipet factory, they inadverten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is declared unconstitutional. Therefore, the portion without utilizing the cenvat credit of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, was rendered to be invalid and struck down as unconstitutional by the Hon'ble Gujarat High Court in the case of Indsur Global Ltd. Vs. Union of India [2014 (310) ELT 833 (Guj.)] and the Hon'ble Madras High Court in the case of Malladi Drugs Pharmaceuticals Ltd. Vs. The Union of India, The Commissioner of Central Excise [2015 (323) ELT 489 (Mad.)]. These decisions were followed in the following cases: - i. Commissioner of Customs, Central Excise Service Tax, Hyderabad-I, vs. Andhra Cylinders Pvt. td. [2024 (4) TMI 7 - Telangana High Court]. ii. M/s. Parallel Track Engineering Pvt. Ltd. vs. The Commissioner of Central Excise, Bangalore [2023 (11) TMI 464 - CESTAT Bangalore]. iii. Indus Tropics Ltd. vs. C.C.E. S.T. Rajkot [2023 (3) TMI 950 CESTAT Ahmedabad]. iv. Principal Commissioner of C. Ex. Delhi vs. Space Telelink Ltd. [2017 (3) TMI 1599-Delhi High Court]. v. The Commissioner of Central Excise Customs, Nashik vs. M/s. Nashik Forge Pvt. Ltd. [2018 (9) TMI 1582-Bombay High Court]. vi. Commissioner CGST Central Excise vs. Endo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest and imposition of penalty does not arise. 2.8 The Ld. Counsel prayed that the appeal may be allowed. 3. The Ld. Authorised Representative Shri Harendra Singh Pal appeared for the Department. The findings in the impugned order were reiterated. It is submitted that the appellant has taken credit on the duty paid on capital goods transferred from their Vellore unit. The entire credit of the capital goods was taken in the same financial year. As per Rule 4(2) of the CENVAT Credit Rules, 2004, the appellant can avail only 50% of the credit on the capital goods in the financial year which the capital goods are received in the factory. They can avail the balance credit in any subsequent year. They have also not opted for transfer of capital goods credit as per Rule 10 of CENVAT Credit Rules, 2004. If the credit availed by the appellant is reduced to 50% for the first financial year, the duty paid by the appellant on the clearances on the goods using the Cenvat credit has to be considered as short paid by the appellant. Thereupon, the goods have to be considered as cleared without payment of duty. Since the appellant defaulted payment of duty for the period December 2012 and Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The second issue is with regard to demand of duty raised alleging violation of Rule 8(3A) of Central Excise Rules, 2002. The said provision has been struck down by the jurisdictional High Court in the case of Malladi Drugs Pharmaceuticals Ltd. Vs. The Union of India, The Commissioner of Central Excise [2015 (323) ELT 489 (Mad.)]. Further, the Gujarat High Court in the case of Indsur Global Ltd. Vs. Union of India [2014 (310) ELT 833 (Guj.)] had taken the very same view and had struck down, the said Rule as unconstitutional and ultra vires. The Department preferred an appeal against the decision passed in Indsur Global Ltd. (supra) before the Hon ble Supreme Court. The Ld. Counsel for the appellant has submitted before us that the appeal filed by the Department in Indsur Global Ltd. (supra) has been disposed by the Hon ble Apex Court as per decision dated 29.07.2024. The appeal was not pressed by the Department in the Lok Adalat proceedings before the Hon ble Supreme Court. The decision rendered by the Hon ble High Courts of Gujarat and Madras in the above cases would revive and be in force as precedent. 8. The Hon ble High Court of Bombay in the case of Commissioner of Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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