TaxTMI 
TaxTMI 
2015 (8) TMI 99
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....re manufacturers of excisable goods, registered under Central Excise and discharging excise duty and they have defaulted payment of central excise duty on consignment basis through P.L.A during the relevant period. The appellants were issued with show cause notices for contravention of Rule 8 (1), 8(3) and 8(3A) of Central Excise Rules, 2002 and Rule 3 (4) of CCR 2004 on the ground that appellants defaulted payment of duty on consignment basis through PLA and the duty paid through cenvat credit should be treated as improper duty payment. The lower authorities confirmed the demand and also appropriated the amounts paid through P.L.A. The adjudicating authority also imposed penalty under rule 25 and Rule 15 and also ordered for interest. All the appeals listed above are on identical issues except few variations in the cases where some of the appellants have paid the duty subsequently through P.L.A. also and in certain cases appellants paid duty only through cenvat account. 3. Heard both sides. Ld. Advocate Shri J. Shankarraman appeared and summarised his arguments and submits that the demand under Rule 8(3A) is no more valid as Hon'ble High Court has struck down the Rule 8(3A) a....
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....ons of Rule 8 (3A) of CER. Adjudicating authority invoked the provisions of Rule 8 (3A) of CER 2002 and confirmed the demands and also appropriated the amount already paid in P.L.A. towards payment of duty. The Hon'ble High Court of Madras in the recent judgement in the case of Malladi Drugs & Pharmaceuitcals Ltd. Vs UOI (supra) and A.R. Metallurgicals Pvt. Ltd. (supra) decided batch of writ petitions and struck down Rule 8(3A) as ultra vires and allowed the writ petitions of assessees. The Hon'ble High Court of Madras in their order concurred the Gujarat High Court judgement in the cases of Indusur Global Ltd. and Precision Fasteners Ltd (supra). The relevant paragraphs of the High Court, Madras in the case of Malladi Drugs & Pharmaceuticals Ltd. are reproduced as under :- This batch of writ petitions challenges the constitutional validity of Rule 8(3A) of the Central Excise Rules, 2002, which was introduced with effect from 1.6.2006, and the said Rule reads as follows:- ''8(3A). If the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule....
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....y beyond thirty days from the due date as prescribed under sub-rule (1), notwithstanding anything contained in sub-rule (1) and sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004, the assessee is bound to pay excise duty at the time of removal without utilizing the CENVAT credit till the date the assessee pays the outstanding amount including interest thereon. The right to pay duty by utilising the CENVAT credit that had accrued cannot be defeated, unless it is a case of illegal or irregular credit (See the decision of the Supreme Court in Dai Ichi Karkaria Ltd., referred supra). To that extent, we find this sub-rule (3A) arbitrary and therefore violative of Article 14. The right that has accrued to an assessee by way of CENVAT credit, that is duty paid on the inputs, cannot be taken away under a rule, which only provides for the manner and method of payment of duty and for levying of interest, if there is a default. The object of the term "without utilizing the CENVAT credit'' would run counter to the scheme of availment of the CENVAT credit on the duty paid inputs. It is a legitimate right that has accrued to an assessee and that cannot be denied arbitrarily under the pr....
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....at there were other proceedings between the same assessee and department pending at various stages on same issue. It was, therefore, provided that the particular order in challenge would not be disturbed but that the benefit of declaration of invalidity of the rule would be available to the petitioner in other pending proceedings. 7. In view of such clear distinction in facts, the modus adopted in the said case in case of Indsur Global Ltd., (supra) cannot be applied in the present case. The impugned tax demands and show cause notice are set aside. Resultantly, all subsequent actions, if any, taken by the department would be set at naught. Petition is allowed. Rule is made absolute accordingly.'' 7. In the light of the aforesaid judgment of the Gujarat High Court, to which view we are agreeable, all the proceedings initiated by the Department in respect of the respective assessees, invoking the said rule by demanding duty along with interest by denying the benefit of CENVAT credit have to be necessarily set aside. Accordingly, the impugned proceedings are set aside. In the result, all the writ petitions are allowed. Consequently, M.P.Nos.1 of 2009, 1 of 2010, 1 of 2011, 1....