CENVAT credit after duty default: unconstitutional restriction cannot be enforced absent a stay or contrary binding view.

Rule 8(3A) of the Central Excise Rules, 2002 could not be enforced to prohibit utilisation of CENVAT credit after the relevant restriction had already been declared unconstitutional. In an all-India fiscal statute, the Tribunal was entitled to follow that existing declaration in the absence of any contrary binding view or stay, and a mere admission of a challenge before the Supreme Court did not suspend the declaration. The assessee's payment of duty by CENVAT credit was therefore not a breach on the Revenue's footing, and no substantial question of law arose from the Tribunal's reliance on the earlier constitutional ruling.

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Issues: Whether, after default in payment of duty, the assessee could discharge excise duty on removal of goods by utilising CENVAT credit despite Rule 8(3A) of the Central Excise Rules, 2002, and whether the Tribunal was justified in following the view that that restriction was unconstitutional.

Analysis: Rule 8(3A) had already been declared unconstitutional to the extent it prohibited utilisation of CENVAT credit. Once that part of the rule ceased to apply, the assessee's use of CENVAT credit could not be treated as a breach on the footing urged by the Revenue. The Act and the Rules are of all-India application, and in the absence of any contrary view or material showing the earlier declaration to be manifestly unsustainable, the Tribunal was entitled to follow the existing law declared by another High Court. Mere admission of a challenge before the Supreme Court did not amount to a stay of the declaration of unconstitutionality. No independent reasons were required from the Tribunal for following that binding legal position.

Conclusion: The restriction in Rule 8(3A) could not be enforced against the assessee to deny use of CENVAT credit, and the Tribunal's decision was . The proposed question did not give rise to any substantial question of law.

Final Conclusion: The Revenue's challenge failed and the dismissal of the appeals left the assessee's relief undisturbed.

Ratio Decidendi: Where a provision has been declared unconstitutional to the extent in question and there is no contrary binding view or stay, authorities and tribunals must follow that declaration in an all-India fiscal statute, and no substantial question of law arises from such reliance.

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