Tribunal Overturns Order, Allows Cenvat Credit Use; No Interest or Penalty Imposed Following Calcutta HC Ruling.

The Tribunal allowed the appeal, setting aside the order that confirmed the demands of Rs.1,15,689/- and Rs.2,91,476/-, including interest and penalty, under Rule 25 of the Central Excise Rules, 2002. It held that the Appellant could use Cenvat credit to pay duty during the period specified under Rule 8(3A), as the rule was declared ultra vires by the Calcutta HC. Consequently, no interest or penalty was imposed, and the appeals were allowed, aligning with the precedent set by the HC and a similar Tribunal decision.

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Issues:
The appeal against the Order-in-Appeal dated 30.12.2010 passed by the Commissioner (Appeals-I), Kolkata, confirming demands of Rs.1,15,689/- and Rs.2,91,476/- including Education Cess and SHE Cess, interest, and penalty under Rule 25 of the Central Excise Rules, 2002.

Issue 1: Duty Payment Utilizing Cenvat Credit
The Appellant defaulted in duty payment during specific months and was asked to pay duty consignment wise through PLA. The Assistant Commissioner confirmed demands by invoking Rule 8(3A) of the Central Excise Rules, 2002, which was upheld by the Commissioner (Appeals). The Appellant cited the Hon'ble Calcutta High Court's decision declaring Rule 8(3A) as ultra vires and a Tribunal decision setting aside a similar demand. The Tribunal observed that the Appellant used Cenvat credit to discharge duty liability during the debarred period. Citing relevant judgments, the Tribunal held that the demand based on Rule 8(3A) cannot be sustained, allowing the appeal.

Decision:
The Appellant is entitled to pay duty using Cenvat credit during the period specified under Rule 8(3A) of the Central Excise Rules, 2002. The impugned order confirming the demand was set aside as it was not sustainable. Consequently, no interest or penalty was deemed necessary. The appeals filed by the Appellant were allowed, following the precedent set by the Hon'ble High Court and the Tribunal's decision.

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