TMI Blog2016 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... Mythili, Advocate For the Respondent : Shri B. Balamurugan, AC (AR) ORDER PER P. K. CHOUDHARY M/s. Varadhalakshmi Mills Ltd. and M/s. Sona Rajendra Spinners (P) Ltd. filed these appeals and the issue involved in both the appeals relates to demand under Rule 8(3A), both are taken up together for disposal. Appeal : E/1107/2003 2. The brief facts of the case are that the appellants are manufacturers of Cotton yarn falling under CH 52 and man made staple fibre yarn falling under 55 of CETA, 1985, and are required to pay excise duty on fortnightly basis in accordance with Rule 173-G(1) of CER, 1944. A SCN dated 14.12.2001 was issued proposing demand of duty of ₹ 41,29,014/- on the clearances made during the period from 07.02.2001 to 31.03.2001 and an amount of ₹ 9.73,159/- on the clearances made during the period 01.04.2001 to 06.04.2001 and proposed penalty under Rule 173Q read with Rule 25 of CER, 2001. On adjudication, the adjudicating authority confirmed the demands proposed under the SCN and imposed a penalty of ₹ 14,000/- under Rule 173Q read with Rule 25 of CER, 2001. On appeal, the Commissioner (Appeals) dismissed the appeal for lack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed supra. He prayed that since the Hon'ble Gujarat High Court and the Hon'ble Madras High Court have struck down the Rule 8(3A) of CER 2002, the demand, interest and penalty confirmed in the impugned orders be set aside and the appellant-assessee's appeals may be allowed. 5. Ld. A.R Shri B.Balamurugan, AC, for the Revenue reiterated the findings of the order and also submitted that in the present appeals adjudicating authority has not only invoked Rule 8(3A) but also other Rules 8(1), 8(3) and Rule 6 have been invoked and also penalty provisions have been invoked. He also submitted that wherever the appellants have paid the duty amount in P.L.A subsequently cenvat credit has been allowed as re-credit. 6. After hearing both sides, we find that the issue in all these appeals relates to whether appellants have not paid central excise duty on consignment basis during default period and also utilized cenvat credit for payment of duty against the provisions of Rule 8 (3A) of CER. Adjudicating authority invoked the provisions of Rule 8 (3A) of CER 2002 and confirmed the demands and also appropriated the amount already paid in P.L.A. towards payment of duty. The Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including interest is declared unconstitutional. Therefore, the portion ''without utilizing the Cenvat credit'' of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, shall be rendered invalid.'' ... ... .... 5. It is not the case of the Department in this batch of writ petitions that the petitioners-assessees have illegally or irregularly 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 the assessee fails to pay the duty by the due date. In contradiction to this procedure, sub-rule (3A) of Rule 8 provides that in default of the payment of duty beyond thirty days from the due date as prescribed under sub-rule (1), notwithstanding anything contained in sub-rule (1) and sub-rule (4) of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, also challenged the show cause notice. In the case of Indsur Global Ltd. (supra) the petitioner had unsuccessfully challenged the order of the adjudicating authority. The appeal was dismissed by the Commissioner on the ground of delay beyond his power to condone. The Tribunal had dismissed further appeal on the ground of gross delay of three years in preferring the appeal before the Tribunal as also on the ground that in any case the Commissioner was right in not entertaining the appeal of the assessee 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, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., etc., v. Union of India rep. by its Secretary, Ministry of Finance etc.) deciding the issue in favour of the assessees therein for the reasons stated therein, following the same, this civil miscellaneous appeal is allowed and the substantial questions of law are answered in favour of the assessee and against the Department. Consequently, M.P.No.1 of 2011 is closed. No costs. 8. Both Hon'ble Gujarat High Court and Madras High Court have held that condition contained in Rule 8 (3A) of Central Excise Rules 2002 for payment of duty without utilisation of cenvat credit is contrary to the scheme of availment of cenvat credit under CCR and the said Rule 8(3A) is arbitrary and violative of Article 14 of the Constitution. Accordingly, the Hon'ble High Court has struck down the Rule 8(3A) as unconstitutional. The jurisdictional Hon'ble Madras High Court's ruling is binding on the jurisdictional adjudicating authority and also binding on this Tribunal. 9. We find that this Bench, in a batch of appeals in the case of Cheran Cements and others Vs. CCE, Trichy reported in 2015-TIOL-2119-CESTAT(MAD.) and by following the judgments of the Hon ble High Court of Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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