2015 (9) TMI 1146

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....sue relates to applicability of Rule 8 (3A) of Central Excise Rules on the default payment. The adjudicating authority ordered for payment of excise duty on consignment basis for two months from 8.10.2005 onwards in P.L.A without utilization of cenvat credit. On appeal, it was reduced to 15 days against which Revenue filed appeal. On the assessee's appeal, penalty imposed for belated payment under Rule 8(3A). We find that the Hon'ble High Court in the case of Malladi Drugs & Pharmaceuticals Ltd. - 2015-TIOL-1262-HC-MAD-CX struck down the Rule 8(3A) as ultra vires. The relevant portion of the Hon'ble High Court's order (supra) is reproduced as under :- "This batch of writ petitions challenges the constitutional validity of R....

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....out utilizing the CENVAT credit till an assessee pays the outstanding amount including interest is unconstitutional. To be more precise, the Court held as follows:- ''36. In the result, the condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the Cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional. Therefore, the portion ''without utilizing the Cenvat credit'' of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, shall be rendered invalid.'' ...            ...            .... 5. It is not the case of the ....

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.... 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 provision under challenge. We, therefore, have no hesitation to concur with the reasoning of the Gujarat High Court that Rule 8(3A) is ultra vires of Article 14 on the ground of arbitrariness. 6. Now coming to the challenge to the proceedings initiated by the Department by invoking Rule 8(3A) of the C....

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....hority. The appeal was dismissed by the Commissioner on the ground of delay beyond his power to condone. The Tribunal had dismissed further appeal on the ground of gross delay of three years in preferring the appeal before the Tribunal as also on the ground that in any case the Commissioner was right in not entertaining the appeal of the assessee which was presented along with the application for condonation of delay after the maximum period which the Commissioner could have condoned. It was in this background the Court held that the issues which are closed cannot be reopened. It was noted that there were other proceedings between the same assessee and department pending at various stages on same issue. It was, therefore, provided that the ....