2017 (8) TMI 1515 - HC - Central Excise

Court Invalidates Rule 8(3A) of Central Excise Rules

M/s. Goyal Mg Gases Pvt. Ltd Versus Union Of India & Others

The court declared Rule 8(3A) of the Central Excise Rules invalid to the extent indicated in previous decisions due to being ultra vires. However, the ... Vires of Rule 8 (3A) of the Central Excise Rule, 2002 - Default in payment of Central Excise duty - imposition of penalty on the petitioner on the basis of Rule 8(3A) of the Rules, 2002 - Held that:- As held in Indsur Global Ltd. [2014 (12) TMI 585 - GUJARAT HIGH COURT] has held that 'without utilising Cenvat credit' used in sub Rule (3A) of Rule 8 of the Central Excise Rule, 2002 is invalid. The revenue cannot take a stand contrary to that obtaining in other High Courts - Rule 8(3A) of the Central Excise Rules to the extent as indicated in Indsur Global Ltd. [2014 (12) TMI 585 - GUJARAT HIGH COURT] is declared to be invalid. Whether the petitioner can benefit out of the declaration of invalidity of such Rule 8(3A) in the facts and circumstances of the present case? - Held that:- Indsur Global Ltd., on which learned advocate for the petitioner places heavy reliance, notices that, the petitioner before Their Lordships had caused 170 days delay in preferring an appeal though the statutory alternative mechanism was available to it. Their Lordships did not grant any monetary relief flowing out of the declaration of Rule 8(3A) to be invalid. The petitioner is not entitled to any relief in the present proceeding. Petition disposed off. Issues:Challenge to the vires of Rule 8(3A) of the Central Excise Rule, 2002; Validity of the order imposing penalty based on Rule 8(3A).Analysis:The petitioner challenged the vires of Rule 8(3A) of the Central Excise Rule, 2002, after facing penalties for violating the rule. The petitioner's appeal against the original order imposing penalties was dismissed due to being beyond the statutory period. The petitioner then approached the High Court, which initially dismissed the writ petition challenging the rule's validity. However, a subsequent order granted leave to the petitioner to challenge the rule's constitutionality in the appropriate legal forum. The petitioner cited decisions from various High Courts where Rule 8(3A) had been struck down.The Additional Solicitor General for the respondents argued that the original order had attained finality and could not be reopened through a collateral challenge to the rule's validity. Despite the challenge to the rule, the order imposing penalties remained valid between the parties. The court considered both parties' arguments and the available evidence.Regarding the validity of Rule 8(3A), the court referenced previous decisions from different High Courts declaring parts of the rule as ultra vires. The court specifically mentioned that the portion of the rule related to 'without utilizing Cenvat credit' was declared invalid based on previous judgments. Consequently, Rule 8(3A) of the Central Excise Rules was declared invalid to the extent indicated in the previous decisions.The court then addressed whether the petitioner could benefit from the rule's invalidity in their specific case. Citing a previous case, the court noted that delay in appealing and the lack of entitlement to monetary relief were crucial factors. As a result, the petitioner was not entitled to any relief in the present case due to similar reasons as the referenced case.In conclusion, the court disposed of the writ petition and made no order as to costs. The parties could obtain certified copies of the order if requested.