Ultra vires excise rule leaves demand, interest and penalty unsustainable after finality of the High Court ruling.

Rule 8(3A) of the Central Excise Rules, 2002, which required duty payment on a consignment-to-consignment basis, had already been declared ultra vires by the High Court, and the Revenue's challenge before the Supreme Court was not pressed. That left the High Court ruling undisturbed and treated as final. Applying its earlier decisions, the Tribunal held that a demand founded on that provision could not survive, and the associated interest and penalty were also unsustainable.

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Issues: Whether the demand, interest, and penalty arising from alleged contravention of Rule 8(3A) of the Central Excise Rules, 2002 could be sustained after the provision had been held ultra vires and the Revenue's challenge had been not pressed before the Supreme Court.

Analysis: The Rule 8(3A) restriction requiring payment of duty on consignment-to-consignment basis had already been declared ultra vires by the High Court, and similar view had been followed in later decisions. The Revenue's appeal before the Supreme Court was disposed of as not pressed, which was treated as leaving the High Court ruling undisturbed and as having attained finality. In that backdrop, the Tribunal followed its earlier decisions and held that the demand confirmed under the impugned order could not survive.

Conclusion: The demand, interest, and penalty founded on Rule 8(3A) were held unsustainable, and the appeal was allowed.

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