2015 (10) TMI 1211

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....endu Patra, Authorised Representative Per : Mr. H.K. Thakur; This appeal has been filed by the appellant with respect to penalty of Rs. 25 Lakhs imposed by the adjudicating authority under Rule 25(1) of Central Excise Rules, 2002. 2. Shri J.N. Bhagat, (Consultant) appearing on behalf of the appellant argued that the issue involved is regarding default in payments of duty as per Rule 8 (3A....

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....s, 2002 ultra-vires to the extent the duty can not be paid through CENVAT credit. It was the case of the appellant that once the entire default amount has been paid and the Hon'ble Gujarat High Court has held certain provisions of Rule 8 (3A) as ultra-vires, therefore, no penalty is attracted in their case. 3. Shri Lalatendu Patra (AR) appearing on behalf of the Revenue defended the order p....

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....s follows:- "35. The situation can be looked at slightly different angle. With or without the provisions of sub-rule (3A), liability to pay interest for the default period as per sub-rule (3) of Rule 8 continues. Sub-rule (3A) is basically a mechanism for stringent recovery and does not create a new liability unless this mechanism itself is breached. In such a mechanism to provide for withdrawa....

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....nvat 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." From the above settled proposition of law, once the provisions of Rule 8(3A) with respect to portion 'without utilisation the CENVAT credit'....