Tribunal Allows Appeal: No Ban on Using Cenvat Credit for Excise Duty During Default, Citing Rule 8(3A) Precedents.

The Tribunal allowed the appeal, setting aside the Impugned Order, and concluded that there is no prohibition on using accumulated Cenvat Credit for paying Central Excise Duty during default periods. This decision followed the precedent set by the Gujarat HC and other HCs, which had declared a portion of Rule 8(3A) of the Central Excise Rules, 2002, as ultra vires. The Tribunal noted that the rule had been struck down by several HCs, permitting the use of Cenvat Credit despite the pending challenge before the SC.

---

---

Issues involved: Interpretation of Rule 8(3A) of the Central Excise Rules, 2002 regarding the payment of Central Excise Duty using Cenvat Credit during default period.

The judgment addresses the issue of the appellant's failure to pay duty on goods removed within the specified due dates, resulting in a default in the payment of Central Excise Duty. A show cause notice was issued and confirmed by the Adjudicating Authority, imposing a penalty. The Revenue contended that the appellant was required to pay duty in cash without using the accumulated Cenvat Credit. The Commissioner(Appeals) upheld the decision, leading to the appeal before the Tribunal.

The respondent Revenue argued that the applicability of Rule 8(3A) has been challenged in various High Courts, with the matter pending before the Supreme Court. The Tribunal noted that the Show Cause Notice was issued under Rule 8(3A) demanding payment in cash, which was already debited from the Cenvat Credit account. The Tribunal observed that Rule 8(3A) has been struck down by several High Courts as ultra vires, allowing the use of Cenvat Credit for duty payment during default periods.

The Tribunal referenced decisions from various High Courts and noted that the Jurisdictional High Court at Calcutta followed the Gujarat High Court's ruling in declaring a portion of Rule 8(3A) as ultra vires. Consequently, the Tribunal concluded that there is no prohibition on utilizing accumulated Cenvat Credit for Central Excise Duty payment during default periods. As a result, the Impugned Order was set aside, and the appeal was allowed.

---