2021 (4) TMI 1109

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....d by the Revenue that the invoice value of the clearances for the following months was more than the value on which duty of excise was discharged; that the short paid duty of Rs. 5,73,721/- was paid along with interest on 26.12.2009; that fully built value of model 'Taurus 2516/2' was revised from Rs. 13,27,141 to Rs. 13,40,658/- w.e.f., 03.03.2008; that the respondent had cleared model 'Taurus 2516/2' by adopting value of Rs. 13,27,141/- vide Invoice No.s 458 dt.11.03.2008 to 479 dt.13.03.2008, thereby short paid duty of excise to the tune of Rs. 42,898/- was paid along with interest on 08.10.2009. 5. According to appellant, the respondent was required allegedly to clear the short paid amount pertaining to the month of November, 2006 along with interest by 05.01.2007 as stipulated under Rule 8(3A) of Central Excise Rules, 2002, and the said short paid amount was paid along with interest on 26.12.2009. 6. A show cause notice in OR.No.81/2010- Adjn(CE)(commr.) dt.05.07.2010 for the default period 05.01.2007 to 26.12.2009 was issued asking the respondent as to why : i. Rs. 5,73,721/- towards duty of excise short paid should not be demanded under proviso....

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....ion 11A of the Central Excise Act, 1944 read with Rule 8 of the Central Excise Rules, 2002 and appropriated an amount of Rs. 42,898/- paid by the respondent against the same; iv. ordered for payment of interest at applicable rates under Section 11AB of Central Excise Act, 1944; on the amounts demanded at Sl.No.(i) to (iii) above and appropriated the amount of Rs. 1,57,352/- paid by the respondent against the same; v. ordered for payment of interest at applicable rates under Section 11AB of Central Excise Act, 1944; on the amounts demanded at Sl.No.(ii) above; vi. imposed a penalty of Rs. 6,16,619/- on the respondent under Section 11AC of Central Excise Act, 1944; vii. imposed a penalty of Rs. 10,00,000/- under rule 25 of Central Excise Rules 2002. 8. Aggrieved by the said Order-in-Original, the respondent preferred an Appeal No.E/45/2012 before the CESTAT. 9. The CESTAT by final order No.A/30845/2020 dt.21.02.2020 allowed the appeal of the respondent and set aside the Order-In-Original to the extent it imposed a demand upon the respondent under Rule 8(3A) of the Central Excise Rules, 2002 and penalties under Section 11AC of the Central Exci....

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....t decision of the High Court of Gujarat in the case of Indsur Global Ltd1 has been stayed by the Apex Court and hence the judgment is in jeopardy and cannot form the ratio decided. 12. In Indsur Global Ltd's case(2014(310) ELT 833 supra) the Gujarat High Court considered sub-Rule (3A) of Rule 8 of the Central Excise Rules, 2002, which provided that in case of an assessee who has defaulted in payment of duty beyond 30 days from the due date, he has to pay excise duty for each consignment at the time of removal without utilizing the Cenvat Credit till he pays the outstanding amount including interest; and in the event of failure, it would be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in the rules would follow. The Gujarat High Court declared that portion of sub-Rule (3A) of Rule 8, which requires a defaulter to clear the finished products on payment of excise duty without availing the Cenvat Credit as unreasonable and violative of Article 14 of the Constitution of India holding that it amounts to a serious restriction on the assessee's fundamental right to carry on trade or business of his choice which....

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....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....... 34. By no stretch of imagination, the restriction imposed under sub-rule (3A) of Rule 8 to the extend it requires a defaulter irrespective of its extent, nature and reason for the default to pay the excise duty without availing Cenvat credit to his account can be stated to be a reasonable restriction. It leads to a situation so harsh and a position so unenviable that it would be virtually impossible 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." 14....