2019 (5) TMI 1345

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....uly 2010, the appellant was, under rule 8(3A) of Central Excise Rules, 2002, barred from such utilisation. 2. It is the contention of Learned Counsel for the appellant that the disbarment relied upon in the adjudication order has been held to be ultra vires by the Hon'ble High Court of Allahabad in Frontier Alloy Steels Ltd v. Union of India [2017 (354) ELT 54 (All.)] and in ATV Projects India Ltd v. Union of India [2016 (341) ELT 603 (All.)], by the Hon'ble High Court of Madras in Malladi Drugs & Pharmaceuticals Ltd v. Union of India [2015 (323) ELT 489 (Mad.)], by the Hon'ble High Court of Punjab & Haryana in Sandley Industries v. Union of India [2015 (326) ELT 256 (P&H)] and by the Hon'ble High Court of Gujarat in Indsur Global Ltd v. U....

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....ds, if not withdraws, his right to take credit of the duty already paid to the Government. It is true that such a provision is made because of peculiar circumstances the assessee lands himself in. However, when such provision makes no distinction between a willful defaulter and the rest, we must view its reasonableness in the background of an ordinary assessee who would be hit and targeted by such a provision. As held by the Supreme Court in the case of Eicher Motors Ltd. (supra) an assessee would be entitled to take credit of input already used by the manufacturer in the final product. In the said case, the Supreme Court was dealing with Rule 57F which was introduced in the Central Excise Rules, 1944 under which credit lying unutilized in ....

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....d to use the credit at any time thereafter when making payment of excise duty on the excisable product. 32. As held by the Supreme Court in the case of Chantamanrao (supra), the phrase "reasonable restriction" connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by Clause (6) of Article 19, it must be held to be wanting in that quality. 33. In the case of Om Kumar (supra),....

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....ble for an assessee who is trapped in the whirlpool to get out of his financial difficulties. This is quite apart from being wholly reasonable, being irrational and arbitrary and therefore, violative of Article 14 of the Constitution. It prevents him from availing credit of duty already paid by him. It also is a serious affront to his right to carry on his trade or business guaranteed under Article 19(1)(g) of the Constitution. On both the counts, therefore, that portion of sub-rule (3A) of rule must fail. 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 mechani....