Penalty under Rule 25 and Section 11AC quashed as Rule 8(3A) declared ultra vires by multiple High Courts (3A)

CESTAT Kolkata allowed the appeal against penalty imposed under Rule 25 of Central Excise Rules read with Section 11AC of Central Excise Act, 1944 for contravention of Rule 8(3A). The assessee cleared excisable goods using installment duty payment facility without consignment-wise payment from Account Current. The tribunal relied on precedents where Rule 8(3A) was declared ultra vires by various HCs including Calcutta HC. Since the assessee paid the defaulted duty with interest and no outstanding liability remained, and considering multiple HC decisions declaring Rule 8(3A) invalid, the penalty could not be sustained.

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Issues involved:
The judgment involves contravention of Rule 8(3A) of the Central Excise Rules, 2002 leading to penalty under Rule 25 read with Section 11AC of the Central Excise Act, 1944.

Summary:
1. The Appellant, engaged in manufacturing excisable goods, is alleged to have contravened Rule 8(3A) of the Central Excise Rules, 2002, making them liable for penalty.
2. Two Show Cause Notices were issued for contraventions involving duty payment on an installment basis without consignment-wise payment, which the Appellant rectified by paying the outstanding dues.
3. The tribunal referred to various cases where High Courts have declared Rule 8(3A) as ultra vires, leading to the decision to set aside the demand and penalties imposed on the Appellant.
4. The Calcutta High Court's ruling in a similar case emphasized that Revenue cannot take a stand contrary to judgments declaring Rule 8(3A) as invalid, which was upheld by the tribunal.
5. Following the jurisdictional High Court's decision, the tribunal set aside the penalty imposed on the Appellant due to the absence of outstanding liability and the invalidity of Rule 8(3A).

This judgment highlights the importance of adhering to legal provisions and the impact of High Court rulings on the interpretation and application of rules in excise matters.

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