Invalid Rule 8(3A) restriction on Cenvat credit cannot support duty demand or penalty based solely on breach.

Rule 8(3A) of the Central Excise Rules, 2002, which restricted use of Cenvat credit after delayed duty payment, was treated as invalid because High Courts had already held it ultra vires and the Revenue's Supreme Court challenge was not pressed. On that basis, a demand and penalty founded solely on breach of that rule could not be sustained. The Tribunal therefore found the impugned order unsustainable, set it aside, and granted consequential relief.

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Issues: Whether the duty demand and penalty were sustainable where the assessee had paid duty beyond the prescribed date and utilised Cenvat credit during the intervening period in alleged breach of Rule 8(3A) of the Central Excise Rules, 2002.

Analysis: The Tribunal followed the view that Rule 8(3A) of the Central Excise Rules, 2002 had already been held ultra vires by the High Courts. It treated that legal position as operative and noted that the Revenue's challenge before the Supreme Court had been disposed of as not pressed. On that basis, the restriction on utilisation of Cenvat credit could not sustain the demand or the penalty.

Conclusion: The demand was held unsustainable and the penalty was not leviable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Once Rule 8(3A) of the Central Excise Rules, 2002 is treated as invalid, a demand or penalty founded solely on breach of that rule cannot be sustained.

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