Appeal Upheld: Tribunal Affirms Reduction of Penalty for Rule Violation

The appeal filed by the Revenue was disposed of, affirming the decision of the Commissioner (Appeals). The appellate tribunal upheld the reduction of penalty from &8377;2 lacs to &8377;20,000/- imposed on the respondent for contravening Rule 8 (3A) of the Central Excise Rules, 2002. The tribunal also considered the constitutionality of Rule 8 (3A) in light of a previous ruling by the Hon'ble Gujarat High Court, which deemed the rule unconstitutional, allowing the Revenue to demand interest for failure to pay duty consignment wise.

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Issues:
1. Failure to pay duty liability in due date under Rule 8 of the Central Excise Rules, 2002.
2. Payment of duty from Cenvat account in contravention of Rule 8 (3A) of the Central Excise Rules, 2002.
3. Imposition of penalty on the respondent.
4. Discharge of duty consignment wise.
5. Constitutionality of Rule 8 (3A) of the Central Excise Rules, 2002.
6. Liability to pay interest on failure to pay duty consignment wise.

Analysis:
Issue 1: The respondent failed to discharge the duty liability in due date under Rule 8 of the Central Excise Rules, 2002. The Adjudicating Authority confirmed the demand of duty to be paid by cash/PLA.

Issue 2: The respondent paid the duty during the defaulted period from the Cenvat account in contravention of Rule 8 (3A) of the Central Excise Rules, 2002. The Adjudicating Authority imposed a penalty of &8377; 2 lacs on the respondent, which was later reduced to &8377; 20,000/- by the Commissioner (Appeals).

Issue 3: The Hon'ble Gujarat High Court in a previous case held that Rule 8 (3A) of the Central Excise Rules, 2002, which requires payment of duty without utilizing Cenvat Credit, is unconstitutional. Therefore, the appellate tribunal did not find any reason to interfere with the order of the Commissioner (Appeals).

Issue 4: The respondent had not paid duty consignment wise during the defaulted period under Rule 8 (3A) of the Central Excise Rules, 2002. The Revenue is granted liberty to raise a demand for interest on the failure to pay duty consignment wise under the said rules.

The appeal filed by the Revenue was disposed of based on the above analysis, affirming the decision of the Commissioner (Appeals) and considering the constitutionality of Rule 8 (3A) of the Central Excise Rules, 2002 as per the precedent set by the Hon'ble Gujarat High Court.

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