TMI Blog2022 (3) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Courts of Gujarat, Madras and Punjab Haryana by various judgements. Appeal allowed - decided in favor of appellant. - Excise Appeal No. 1290 of 2012 - A/85193/2022 - Dated:- 9-3-2022 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri Manoj Chauhan, Chartered Accountant, for the Appellant Shri Sanjay Hasija, Superintendent, Authorised Representative for the Respondent ORDER This appeal is directed against order-in-appeal No. YDB(65)Th-I/2012 dated 30.05.2012 of the Commissioner of Central Excise (Appeals), Mumbai-I, upholding the order-inoriginal of the Additional Commissioner of Central Excise, Thane- I. By his order, the Additional Commissioner has held as follows:- ORDER 29.01 I order that the facility to M/s Gujarat Colours Coatings Ltd., for payment of duty through Cenvat credit account be treated as discontinued for the period from 06.12.2008 till the date of payment of Central Excise duty without utilizing Cenvat credit under the provisions of Rule 8(3A) of the Central Excise Rules, 2002; and the goods cleared w.e.f. 06.12.2008 to 30.06.2010 be treated as the goods cleared without pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. 29.05 above, within 30 (thirty) days from the date of communication of this order, the amount of penalty liable to be paid, as per Sr. No. 29.06 above by them under Section 11AC of the Central Excise Act, 1944 shall be 25% of the demand confirmed at Sr. No. 29.02 to 29.04 above. The benefit of reduced penalty shall be available only if the amount of penalty so imposed is paid within the period of 30 (thirty) days from the date of communication of this order. 2.1 Appellant are manufacturer of excisable goods classifiable under Chapters 31 and 32 of Schedule 1 to the Central Excise Tariff Act. In their ER-1 return for the month of October 2008, they had assessed the duty on the goods cleared during that period to be ₹ 6,59,119/-. However, due to some reasons, they paid the duty only to the extent of ₹ 5,73,389/- thereby there was short payment of ₹ 85,730/-. The appellant made good the duty that was short paid, along with interest on 15.02.2009. Two show cause notices dated 18.02.2010 and 04.11.2020 were issued to the appellant demanding duty in terms of Rule 8(3A) of the Central Excise Rules, 2002 to the extent of ₹ 50,48,582/-. The show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Rules as it stood at the relevant time, power was given to the Government by notification to withdraw facilities from the manufacturers, registered dealers or exporters under certain circumstances having regard to the extent of evasion of duty, nature and type of offences or such other factors as has been relevant. In exercise of such powers, Notification No. 17/2006 was issued providing for withdrawal of facilities and for imposition of restrictions against who are prima facie found to be knowingly involved in any of the following : (a) removal of goods without the cover of an invoice and without payment of duty; (b) removal of goods without declaring the correct value for payment of duty, where a portion of sale price, in excess of invoice price, is received by him or on his behalf but not accounted for in the books of account; (c) taking of CENVAT credit without the receipt of goods specified in the document based on which the said credit has been taken; (d) taking of CENVAT credit on invoices or other documents which a person has reasons to believe as not genuine; (e) issue of excise duty invoice without delivery of goods specified in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 8 to the extend it requires a defaulter irrespective of its extent, nature and reason for the default to pay the excise duty without availing Cenvat credit to his account can be stated to be a reasonable restriction. It leads to a situation so harsh and a position so unenviable that it would be virtually impossible for an assessee who is trapped in the whirlpool to get out of his financial difficulties. This is quite apart from being wholly reasonable, being irrational and arbitrary and therefore, violative of Article 14 of the Constitution. It prevents him from availing credit of duty already paid by him. It also is a serious affront to his right to carry on his trade or business guaranteed under Article 19(1)(g) of the Constitution. On both the counts, therefore, that portion of sub-rule (3A) of rule must fail. 35 . The situation can be looked at slightly different angle. With or without the provisions of sub-rule (3A), liability to pay interest for the default period as per sub-rule (3) of Rule 8 continues. Sub-rule (3A) is basically a mechanism for stringent recovery and does not create a new liability unless this mechanism itself is breached. In such a mechanism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the Hon ble Gujarat High Court in the case of Indsur Global Ltd. v. UOI cited supra has declared the words without utilizing Cenvat credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat credit which is what exactly has been done in the instant case by the appellant. 9 . We find that the said judgment has been followed by the Hon ble Calcutta High Court in the case of Goyal MG Gases Pvt. Ltd. v. UOI cited supra which is not stayed by the Hon ble Supreme Court. The Hon ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee. 10. We find that the demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence, the demand cannot be sustained and the appeal, thus, succeed on this count. 4.1 Accordingly we do not find any merits in the impugned order which is set aside and the appeal allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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