Cenvat credit demand under Rule 8(3A) cannot survive once the rule has been struck down.

A demand for alleged wrong utilisation of Cenvat credit under Rule 8(3A) of the Central Excise Rules, 2002 was found unsustainable because the demand rested solely on that provision. The Court noted that Rule 8(3A) had already been struck down by various High Courts, so the assessee could not be compelled to pay the alleged arrears in cash on that basis. The impugned demand was quashed and the writ petition succeeded.

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Issues: Whether the demand raised by the department for alleged wrong utilisation of Cenvat credit, based on Rule 8(3A) of the Central Excise Rules, 2002, could be sustained.

Analysis: The demand was founded on the premise that the assessee was ineligible to utilise Cenvat credit for the relevant period and was therefore required to pay the alleged arrears in cash. The controlling premise of the demand was Rule 8(3A) of the Central Excise Rules, 2002. The Court noted that this rule had already been struck down by various High Courts and that the issue no longer required reconsideration on merits in the present writ petition.

Conclusion: The demand was held to be unsustainable and was quashed.

Final Conclusion: The writ petition succeeded and the impugned demand was set aside.

Ratio Decidendi: A demand founded solely on Rule 8(3A) of the Central Excise Rules, 2002 cannot be sustained once that provision has been struck down.

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