2020 (3) TMI 80 - AT - Central Excise

Vires of Rule 8(3A) of Central Excise Rules 2002 - Default in discharging duty beyond 30 days from the due date - sub rule 8 of Central Excise Rule 2002 - whether utilization of CENVAT credit during the period of default in discharging monthly duty liability is irregular and in breach of Rule 8(3A) of Central Excise Rules, 2002? HELD THAT - The issue is no more res-integra and considered by the Hon ble Gujarat High Court in the case of Indsur Global Ltd vs. Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT - It has been held that during the default period payment of duty by utilization of CENVAT credit account is not irregular and consequently the said portion of the Rule 8(3A) of Central Excise Rules, 2002 which debars utilization has been held as ultra vires. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against Order-in-Appeal No. SB/94/THII/ 09 dated 26/11/2009 passed by the Commissioner of Central Excise (Appeals), Mumbai.

Analysis:
The appellant defaulted in discharging duty beyond the prescribed due date under sub rule 8 of Central Excise Rule, 2002 during specific months in 2006 and 2007. A demand notice was issued, alleging irregular utilization of CENVAT Credit amounting to Rs. 22,67,640 during the mentioned period. The demand was confirmed with interest and penalty after adjudication. The appellant appealed against this decision, which was rejected by the Commissioner (Appeals), leading to the current appeal.

The appellant argued that Rule 8(3A) of Central Excise Rules, 2002, under which proceedings were initiated, was declared ultra vires by the Hon'ble Gujarat High Court in a specific case. They contended that the utilization of CENVAT Credit during a default period should not be considered irregular. This argument was supported by references to judgments by the Hon'ble Gujarat High Court and the Hon'ble Bombay High Court in related cases. The Revenue, represented by the Authorized Representative, reiterated the findings of the Commissioner (Appeals).

After hearing both sides and examining the records, the Tribunal focused on the central issue of whether utilizing CENVAT credit during a default period in discharging monthly duty liability is irregular as per Rule 8(3A) of Central Excise Rules, 2002. The Tribunal referenced the judgments of the Hon'ble Gujarat High Court and the Hon'ble Bombay High Court, which held that such utilization during a default period is not irregular. Consequently, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal with any consequential relief as per law.