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2017 (8) TMI 594 - HC - Central ExciseCENVAT credit - validity of proviso to Rule 3(4) - vires of Rule 3(4) of the CENVAT Credit Rules, 2004 - the effect of this proviso is that though a manufacturer is obliged to discharge excise duty liability by 5th or 6th day of the next month, the CENVAT Credit taken by the manufacturer only till the end of the month to which the excise duty related could be utilized and CENVAT Credit legally availed during the first 5 days or 6 days of the subsequent months could not be utilized for paying duty of excise for the goods cleared in the previous month. - Scope of Rule 8(1) of the Central Excise Rules, 2002 Held that: - Though the manufacturer may have CENVAT Credit in his account the same cannot be permitted to be utilized after the end of the month, more particularly, between the last day of the month and the 6th day of the following month, and therefore, proviso to Sub Rule (4) of Rule 3 of the CENVAT Credit Rules would be just contrary and /or in conflict with Rule 8(1) of the Central Excise Rules, 2002. A manufacturer can be and should be permitted to utilize the CENVAT Credit legally availed during the first 5 days or 6 days of the subsequent month for paying the duty of the excise for the goods cleared in the previous month. Proviso to Sub Rule (4) of Rule 3 of the CENVAT Credit Rules can be said to be ultra vires to Rule 3(1) of the CENVAT Credit Rules as it does not have any nexus with the object sought to be achieved by the Rules and in fact runs contrary to the principles of CENVAT Credit Rules. The proviso to Sub Rule (4) of Rule 3 of CENVAT Credit Rules is held to be ultra vires and unconstitutional to the Scheme of CENVAT Credit - the appropriate authority to adjudicate the show cause notice accordingly and consider and /or treat the proviso to Sub Rule (4) of Rule 3 of CENVAT Credit Rules as unconstitutional, in accordance with law. Petition allowed - decided in favor of petitioner.
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