TMI Blog2021 (4) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... n denying utilization of Cenvat Credit to the assessee by applying the said sub-rule. Gujarat High Court in Indsur Global Ltd's case declared that portion of sub-Rule (3A) of Rule 8, which requires a defaulter to clear the finished products on payment of excise duty without availing the Cenvat Credit as unreasonable and violative of Article 14 of the Constitution of India holding that it amounts to a serious restriction on the assessee's fundamental right to carry on trade or business of his choice which is guaranteed under Article 19(1)(g) of the Constitution of India - Merely because the Hon'ble Supreme Court granted stay of the said order of the Gujarat High Court, it is not open to the appellant herein to contend that the ratio of the Gujarat High Court ought not to be followed by this Court. The Tribunal rightly set aside the penalty imposed on the respondent and also the demand imposed on the respondent under Rule 8(3A) - no substantial question of law arises for consideration in this Appeal - Appeal dismissed - decided against Revenue. - CEA No. 4 OF 2021 - - - Dated:- 22-4-2021 - HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO And THE HON'BLE SRI JUSTIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Act, 1944. iii. ₹ 42,898/- towards the short paid duty of excise on the goods cleared vide invoice bearing S.No.s 458/11.03.2008 to 479/13.03.2008 should not be demanded under proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944 read with Rule 8 of Central Excise Rules, 2002; iv. ₹ 5,73,721/- paid by M/s DRD Body Tech's (India) Pvt. Ltd. should not be adju8sted against the duty demanded at Sl.No.(i) above; v. ₹ 42,898/- paid by M/s. DRD Body Tech's (India) Pvt. Ltd. Should not be adjusted against the duty demanded at Sl.No.(iii) above. vi. Interest under Section 11AB of Central Excise Act, 1944 should not be paid by them on the amounts demanded at Sl.No.(i) to (iii) above; vii. Penalty under Section 11AC of Central Excise Act, 1944 should not be imposed on them towards short/default payment of duty demanded at Sl.No.(i) to (iii) above; viii. Penalty under Rule 25 of the Central Excise Rules, 2002 should not be imposed on them for contravention of provisions of Rule 4, 6 and 8 of Central Excise Rules, 2002; 7. The said show-cause notice was adjudicated vide Order-in-Original No.29/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case they have already paid as duty even before the audit whatever they declared as payable. The audit actually found that some additional amounts were payable over and above what was declared in their ER returns as duty. Rule 8(3A) does not apply to every case where the department, during the scrutiny of returns, during the audit or during the investigation finds any additional amount is payable as duty of excise. All such demands will be recoverable by issuing a notice under Section 11A of Central; Excise Act, 1944, but they do not get covered under Rule 8(3a) of Central Excise Rules, 2002. Otherwise, in every case, where the demand is raised under Section 11A Rule 8(3A) would have been invokable which will result in utter chaos and confusion. For instance, if Rule 8(3A) is applied in all demand cases in every show-cause notice, for a demand \under Section 11A the department can seek to deny the benefit of CENVAT Credit on all clearances made after the alleged short payment and thus make a massive demand. At every stage of adjudication, i.e., at the level of adjudicating authority, First Appellate Authority, the CESTAT, the High Court, and the Hon'ble Supreme Court, the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business or due to financial crunch temporarily felt by the manufacturer who though might have cleared the finished goods and also sold the goods in the market may not have received the payment as promised. All such cases of defaults willful or otherwise are clubbed together for the same treatment and a stringent condition of payment of excise duty without availing Cenvat Credit is imposed. It can be appreciated that where a manufacturer falls behind the payment schedule on account of financial constraints, such as, slowing down of business, competition in the market, reducing the profit margins, promised payments from the purchasers not coming forth or temporary labour disputes, would find it extremely difficult thereafter to raise further funds for payments of duty in addition to the duty which he has already paid. Cenvat credit is available to a manufacturer upon purchase of inputs which are duty paid. It is the duty element which the assessee has already suffered which is credited to his Cenvat credit account available to him for adjustment for payment of excise duty liability upon clearance of the finished product. If such facility is withdrawn, it could be appreciated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not open to the appellant herein to contend that the ratio of the Gujarat High Court ought not to be followed by this Court. 16. In the Government of Andhra Pradesh and others vs. P. Gautam Kumar and others 2012 (6) A.L.D. 458 (D.B.), a Division Bench of this Court presided over by Hon'ble Sri Justice G. Raghuram and one of us (MSR,J) considered the effect of grant of an interim order by the Supreme Court. After referring to the decisions of the Supreme Court in Kishor Kirtilal Mehta and others vs. Lilavati Kirtilal Mehta Medical Trust and others (2007) 10 S.C.C. 21 and State of Assam vs. Barak Upatyaka D.U. Karmachari Sanstha (2009) 5 S.C.C. 694 laid down the following principles : Para No.63. .... ... (i) mere grant of stay by the Supreme Court in an appeal would not per se require the High Court, in the matter pending before it to draw inferences on merits (of the judgment appealed), from the fact that a stay was granted; (ii) the High Court in the above circumstances must decide the matter on merits uninfluenced by the fact that an interim stay was granted by the Supreme Court; (iii) a precedent is the principle contained in a judicial decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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