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2021 (8) TMI 795 - AT - Central ExciseLevy of penalty - default in payment of excise duty - Constitutional validity of the Rule 8 (3A) of Central Excise Rules, 2002 - HELD THAT:- Since the Rule 8 (3A) which restricted the payment of Central Excise duty from the CENVAT Credit Account during the period of default, has been held unconstitutional by the Hon’ble High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA & 2 [2014 (12) TMI 585 - GUJARAT HIGH COURT] to that extent, the very basis of Show Cause notice do not survive. In absence of the restriction imposed by the Rule 8 (3A) towards utilization of CENVAT Credit for payment of Central Excise duty the appellant cannot be defaulted for payment of duty by utilization of CENVAT Credit. Commissioner has category held in favour of the Appellant and have agreed that the appellant were making the payment of duty as due by utilizing the CENVAT Credit. Since Appellant were paying the duty utilizing the CENVAT Credit they cannot be charged for contravention of the provisions of Rule 4, 8(1), 8(3) & 8(3A) of the Central Excise Rules, 2002 for which the penalty has been imposed under Rule 25 of Central Excise Rules, 2002, equivalent to the demand of duty. In view of Hon’ble High Court order since we conclude that payment of duty by utilizing the CENVAT Credit was proper mode of payment of duty during the period of default, the penalty imposed on the Appellant needs to be set aside. Since the appeal filed by the revenue do not take into account the decision of Gujarat High Court, subsequently in case of Indsur Global Ltd., holding the Rule 8 (3A) unconstitutional to the extent of the restricting the payment of Central Excise Duty by utilizing CENVAT Credit, there are no merits in the appeal filed by the Revenue. Appeal allowed.
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