Rule 8(3A) Central Excise Rules declared ultra vires; Cenvat credit utilisation allowed and departmental appeal dismissed.

Rule 8(3A) of the Central Excise Rules was held ultra vires for purporting to deny utilisation of Cenvat credit; the Tribunal's reliance on prior High Court authorities that struck down the rule was affirmed and its allowance of Cenvat credit was sustained. The court rejected the department's attempt to undermine those High Court decisions by reference to a subsequent Supreme Court disposal on low tax effect, holding that multiple High Court rulings invalidating a central subordinate provision continue to bind and do not permit entertaining the departmental appeal, which was dismissed.

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Issues: Whether Rule 8(3A) of the Central Excise Rules, 2002 can be applied to deny utilisation of Cenvat credit for payment of duty, and whether the departmental appeal against the Tribunal's order should be entertained.

Analysis: The Court examined the Tribunal's reliance on earlier High Court decisions which declared Rule 8(3A) ultra vires (including Indsur Global Ltd. and subsequent High Court authorities) and noted that those decisions remain binding. The Court considered the subsequent disposal of the Supreme Court matter on the ground of low tax effect under the Circular dated 22.8.2019, but found that such disposal does not negate the binding effect of multiple High Court rulings striking down the rule. The Court also considered the PAN-India effect of the High Courts' decisions in relation to a central statutory provision and the continuing operation of the rulings declaring the rule invalid.

Conclusion: The Tribunal's decision, which followed authorities striking down Rule 8(3A) as ultra vires and thereby allowed utilization of Cenvat credit, is to be sustained; there are no grounds to entertain the departmental appeal and the appeal is dismissed.

Ratio Decidendi: Rule 8(3A) of the Central Excise Rules, 2002 is ultra vires and cannot be applied to deny utilisation of Cenvat credit, and High Court decisions striking down a central statutory provision bind the department across jurisdictions.

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