Appellant penalized for duty violation, penalty reduced, duty demand satisfied, appeal disposed.

The Tribunal found the appellant in violation of Rule 8(3A) by not paying duty consignment-wise, leading to confiscation of goods and imposition of a penalty under Rule 25. The penalty was reduced to Rs. 50,000 from Rs. 3,00,000 initially imposed. The demand for duty was considered satisfied through credit/cash payment, in line with the Gujarat High Court's decision in a related case. The appeal was disposed of accordingly.

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Issues Involved:
1. Default in monthly payment of duty and violation of Rule 8(3A) of the Central Excise Rules, 2002.
2. Legality of Rule 8(3A) as per the judgment of the Hon'ble High Court of Gujarat.
3. Imposition of penalty under Rule 25 read with Section 11AC of the Central Excise Act.

Detailed Analysis:

1. Default in Monthly Payment of Duty and Violation of Rule 8(3A):
The appellant defaulted in the monthly payment of duty for October, November, and December 2010. Rule 8(3A) of the Central Excise Rules, 2002 mandates that if an assessee defaults in payment of duty beyond thirty days from the due date, they must pay excise duty for each consignment at the time of removal without utilizing the CENVAT credit. The appellant continued to clear goods without adhering to this provision from 6.12.2010 to 14.12.2010, 6.1.2011 to 7.1.2011, and 6.2.2011 to 23.2.2011, thus violating Rule 8(3A). Consequently, a show cause notice was issued for the payment of Rs. 7,16,391/- along with interest and penalty under Rule 25 read with Section 11AC. The original authority confirmed the demand, interest, and penalty, which was later reduced by the first appellate authority to Rs. 3,00,000/-.

2. Legality of Rule 8(3A) as per the Judgment of the Hon'ble High Court of Gujarat:
The appellant argued that the Hon'ble High Court of Gujarat in *Indsur Global Ltd. vs. UOI* and *Precision Fasteners Ltd. vs. CCE* held Rule 8(3A) as arbitrary and unreasonable, violating Articles 14 and 19(1)(g) of the Constitution. The court declared the restriction on utilizing CENVAT credit as unconstitutional. However, the respondent contended that the judgment only invalidated the restriction on utilizing CENVAT credit, not the entire Rule 8(3A). The Tribunal noted that the Gujarat High Court found the restriction on utilizing CENVAT credit unreasonable and unconstitutional but upheld other provisions of Rule 8(3A), which require the payment of duty for each consignment at the time of removal until the outstanding amount is paid. The appellant failed to pay duty consignment-wise, thus violating Rule 8(3A).

3. Imposition of Penalty under Rule 25 Read with Section 11AC:
The appellant contended that no penalty could be imposed under Rule 25 read with Section 11AC, citing the *CCE vs. Saurashtra Cement Ltd.* case, where the Gujarat High Court ruled that penalty under Rule 25 was not applicable as none of the sub-clauses (a), (b), (c), or (d) were invokable. However, the respondent argued that the facts of the present case differed as it involved Rule 8(3A), which mandates consignment-wise duty payment. The Tribunal held that the appellant violated Rule 8(3A), making the goods liable for confiscation and the appellant liable for penalty under Rule 25(1)(a). The Tribunal reduced the penalty from Rs. 3,00,000/- to Rs. 50,000/- considering the duty involved and the number of days of violation.

Conclusion:
The Tribunal concluded that the appellant violated Rule 8(3A) by not paying duty consignment-wise, making the goods liable for confiscation and the appellant liable for penalty under Rule 25. The penalty was reduced to Rs. 50,000/-. The demand for duty did not survive as the amount was later paid through credit/cash, aligning with the Gujarat High Court's decision in *Indsur Global Ltd.* The appeal was disposed of accordingly.

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