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Commissioner of Central Excise, Chennai-II Versus Sai Mirra Innopharm Pvt. Ltd. and vice versa

2015 (9) TMI 1146 - CESTAT CHENNAI

Applicability of Rule 8 (3A) - payment of excise duty on consignment basis - Held that:- High Court in the case of Malladi Drugs & Pharmaceuticals Ltd. - [2015 (5) TMI 603 - MADRAS HIGH COURT] struck down the Rule 8(3A) as ultra vires. - Tribunal in a batch of appeals in the case of Cheran Cements Ltd. & Others Vs CCE Trichy [2015 (8) TMI 99 - CESTAT CHENNAI] following the Hon'ble High Court's order (supra) allowed the assessee's appeals and rejected the revenue's appeals. In view of High Court' .....

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r dt. 21.11.2005 and the assessee's appeal is filed against the order of Commissioner of Central Excise, Chennai-II. 2. After hearing both sides, we find that the issue relates to applicability of Rule 8 (3A) of Central Excise Rules on the default payment. The adjudicating authority ordered for payment of excise duty on consignment basis for two months from 8.10.2005 onwards in P.L.A without utilization of cenvat credit. On appeal, it was reduced to 15 days against which Revenue filed appeal .....

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fect from 1.6.2006, and the said Rule reads as follows:- ''8(3A). If the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004, the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assessee pays the outstanding amount including interest ther .....

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the said rule was considered by a Division Bench of the Gujarat High Court in the case of Indsur Global Ltd., v. Union of India, 2014 (310) E.L.T.833 (Guj.) = 2014-TIOL-2115-HC-AHM-CX, wherein the Court declared that the condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the CENVAT credit till an assessee pays the outstanding amount including interest is unconstitutional. To be more precise, the Court held as follows:- ''36. In the result, the condition .....

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rregularly taken the CENVAT credit. It is to be mentioned herein that sub-rule (1) of Rule 8 provides for the manner of payment of duty on the goods removed from the factory or the warehouse as provided thereunder. Sub-rule (2) of Rule 8 extends the benefit of duty to the third party purchaser, who buys the excisable goods removed by the assessee and such goods are deemed to have suffered duty of excise. Under sub-rule (3) of Rule 8, interest is liable to be paid on the outstanding amount, if th .....

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g interest thereon. The right to pay duty by utilising the CENVAT credit that had accrued cannot be defeated, unless it is a case of illegal or irregular credit (See the decision of the Supreme Court in Dai Ichi Karkaria Ltd., referred supra). To that extent, we find this sub-rule (3A) arbitrary and therefore violative of Article 14. The right that has accrued to an assessee by way of CENVAT credit, that is duty paid on the inputs, cannot be taken away under a rule, which only provides for the m .....

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vires of Article 14 on the ground of arbitrariness. 6. Now coming to the challenge to the proceedings initiated by the Department by invoking Rule 8(3A) of the Central Excise Rules, 2002 and the consequential orders passed by the original authority or appellate authority, as the case may be, in demanding duty along with interest, the Gujarat High Court in the case of Precision Fasteners Ltd., v. Commissioner of Central Excise, 2014-TIOL-2211-HC-AHM-CX, has held as follows:- ''4. When the .....

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le (3A) of Rule 8, did not disturb the orders passed by the revenue authorities as upheld by the Tribunal, since such dispute had achieved finality. Counsel would urge that in the present case also the same course should be adopted. 6. In our opinion, however, there is vital difference between the two sets of facts. In the present case, the petitioner had raised the challenge to the statutory provisions even before the adjudicating authority had taken a final decision. He had, along with rule, a .....

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sessee which was presented along with the application for condonation of delay after the maximum period which the Commissioner could have condoned. It was in this background the Court held that the issues which are closed cannot be reopened. It was noted that there were other proceedings between the same assessee and department pending at various stages on same issue. It was, therefore, provided that the particular order in challenge would not be disturbed but that the benefit of declaration of .....

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