Rule 8(3A) and its Explanation must be applied fully before rejecting settlement and remanding excise default cases.

Rule 8(3A) of the Central Excise Rules, 2002 requires an assessee in default beyond thirty days to pay duty for each consignment without using CENVAT credit until the arrears with interest are cleared, and its Explanation extends "duty" to amounts payable under the CENVAT Credit Rules, 2004. The Settlement Commission's order was set aside because it considered only Rule 8(3A) and failed to account for the Explanation, amounting to non-consideration of relevant law. The writ objection under Article 226 was rejected, as judicial review remains available where a statutory authority ignores applicable legal provisions and causes prejudice. The matter was remanded for fresh consideration under the rule and its Explanation.

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Issues: Whether the order of the Settlement Commission rejecting the settlement application and remanding the matter was liable to be set aside for failure to consider the Explanation to Rule 8(3A) of the Central Excise Rules, 2002, and whether the writ petition was maintainable under Article 226 of the Constitution of India.

Analysis: The dispute turned on the effect of Rule 8(3A), which requires an assessee in default beyond thirty days to pay duty for each consignment without utilising CENVAT credit until the outstanding dues with interest are paid. The Explanation to the rule expands the expression "duty" or "duty of excise" to include amounts payable under the CENVAT Credit Rules, 2004. The impugned order proceeded only on Rule 8(3A) and did not consider the Explanation, though the petitioner had asserted that payment through CENVAT credit was legally relevant. Since the statutory provision relied upon was applied incompletely, the order was held to suffer from non-consideration of relevant law. The objection to writ maintainability was rejected in view of the availability of judicial interference where a statutory authority ignores applicable legal provisions and causes prejudice.

Conclusion: The impugned order was set aside and the matter was remanded for fresh consideration in accordance with Rule 8(3A) and its Explanation; the writ petition succeeded.

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