2019 (4) TMI 1254 - AT - Central Excise

Tribunal permits Cenvat Credit use for Central Excise Duty, rejects penalties

Commr. Of Central Excise-Kolkata-IV Versus M/s. Star Battery Ltd. vice-versa

The Tribunal allowed the use of Cenvat Credit for payment of Central Excise Duty during a default period, following the striking down of Rule 8 (3A) of ... Bar on utilization of CENVAT Credit - default in making payment of Central Excise Duty - constitutional validity of Rule 8 (3A) of the Central Excise Rules, 2002 - HELD THAT:- The Jurisdictional High Court at Calcutta, in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA & OTHERS [2017 (8) TMI 1515 - CALCUTTA HIGH COURT] has followed the decision of the Gujarat High Court in INDSUR GLOBAL LTD. VERSUS UNION OF INDIA & 2 [2014 (12) TMI 585 - GUJARAT HIGH COURT] and has held the portion of rule 8 (3A) as ultra vires. There is no bar in making use of Cenvat Credit in making payment of Central Excise Duty even during default period, in view of the fact that the Rule 8 (3A) ibid which steps otherwise, has been struck down as ultra vires. The portion of the order imposing penalties as well as demand for Central Excise Duty is set aside - appeal disposed off. Issues involved:Interpretation of Rule 8 (3A) of the Central Excise Rules, 2002 regarding the use of Cenvat Credit for payment of Central Excise Duty during default period.Confirmation of demand of duty along with penalty by the Adjudicating Authority.Validity of the impugned orders dated 23/02/2012 and 17/04/2012 allowing the use of Cenvat Credit during default period.Analysis:Issue 1: Interpretation of Rule 8 (3A) of the Central Excise Rules, 2002The appeals revolved around the question of whether the assessee could utilize Cenvat Credit for discharging Central Excise Duty during a default period when payment in cash was required. The Commissioner (appeals) had allowed the appeals filed before him, permitting the use of Cenvat Credit during the default period but imposed penalties. The Revenue challenged this view, arguing that Cenvat Credit cannot be used during default. The Ld. Consultant cited various High Court decisions, including the Jurisdictional High Court at Calcutta, which held Rule 8 (3A) as ultra vires. The Tribunal concurred with this view, stating that the Rule had been struck down as ultra vires, allowing the use of Cenvat Credit for payment during the default period.Issue 2: Confirmation of demand of duty along with penaltyThe Adjudicating Authority had confirmed the demand of duty along with penalties in the impugned order dated 24/03/2009. The assessee challenged this demand in their appeal. However, after considering the arguments and legal precedents presented, the Tribunal set aside the portion of the order imposing penalties and the demand for Central Excise Duty. Consequently, all the appeals and cross-objection were disposed of in favor of the assessee.Conclusion:The Tribunal, in a detailed analysis, concluded that the use of Cenvat Credit for payment of Central Excise Duty during a default period was permissible following the striking down of Rule 8 (3A) of the Central Excise Rules, 2002 as ultra vires. As a result, the penalties imposed and the demand for duty were set aside. The judgment highlighted the importance of legal interpretations and precedents in resolving disputes related to tax liabilities and payment mechanisms under the Central Excise regime.