High Court upholds Tribunal decision on excise duty payment

The High Court upheld the Tribunal's decision allowing the respondent, a copper tube manufacturer, to pay excise duty through a Cenvat account despite defaulting on payments. The Court relied on the unconstitutionality declaration of Rule 8(3A) by another High Court, stating that until a contrary decision by a competent court, the ruling stands. The High Court dismissed the appeals, emphasizing that filing an appeal does not stay the previous ruling's effect, finding no distinguishing features justifying a different view and disposed of the appeals accordingly.

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Issues:
Challenge to Tribunal's order under Section 35G of the Central Excise Act, 1944 regarding excise duty payment through Cenvat account instead of PLA as per Rule 8(3) of the Act.

Analysis:
The High Court heard two appeals challenging the Tribunal's order regarding excise duty payment through a Cenvat account instead of PLA under Rule 8(3) of the Central Excise Act, 1944. The Revenue questioned the Tribunal's decision on whether the respondent could pay excise duty on final products through Cenvat account during the default period. An identical issue was previously dismissed by the High Court. The respondent, a manufacturer of copper tubes, defaulted in paying excise duty as per Rule 8(1), triggering Rule 8(3) which restricts Cenvat credit utilization for duty payment. Despite default, the respondent continued clearing goods using Cenvat credit. Show-cause notices were issued, confirmed by authorities, and appealed. The Tribunal allowed the appeal following the Gujarat High Court's decision that Rule 8(3A) was unconstitutional, permitting Cenvat credit use. The Revenue argued the impugned order lacked reasoning and cited a pending appeal before the Supreme Court challenging the Gujarat High Court's decision. The High Court noted the unconstitutionality declaration of Rule 8(3A) by the Gujarat High Court, making it inapplicable. Referring to precedents, the High Court upheld the Tribunal's decision, stating that until a contrary decision by a competent High Court, the ruling stands. The High Court dismissed the appeals, emphasizing that filing an appeal does not stay the previous ruling's effect.

The High Court found no distinguishing features justifying a different view in these cases. The Court acknowledged a previous order related to a similar issue adjourned for the Supreme Court's decision on the Gujarat High Court's ruling. Despite not being informed of this order initially, the High Court examined the issue on merits and passed a final order. Given the previous order's decision on the issue, the High Court followed the same and disposed of the present appeals accordingly. Both appeals were ultimately dismissed based on the reasons provided in the judgment.

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