2026 (1) TMI 424

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....ed demand of central excise duty under rule 8(3A) of the Central Excise Rules, 2002 [2002 Rules] has been confirmed with penalty. 2. It appears from the records that the appellant had not paid education cess of Rs. 1,392/- due in the month of March, 2014 and had made a remark in the ER-1 Return that it will be paid shortly. However, the said amount was not paid even after a lapse of one month from the due date i.e March 31, 2014 and it was paid only on December 16, 2014. 3. A show cause notice dated May 20, 2015 was issued to the appellant for the period from May 01, 2014 to December 15, 2014 for payment of central excise duty with penalty. 4. The demand was confirmed by the Joint Commissioner by the order dated July 05, 2017 and t....

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.... not paid, for each month or part thereof calculated from the due date, for the period during which such failure continues." 8. In view of the amendment, the demand of duty was reduced to Rs. 53,45,348/- against the earlier demand of Rs. 1,84,99,036/-. 9. The submission that has been made on behalf of the appellant is that sub-rule (3A) of rule 8 of the 2002 Rules has been struck down by the Gujarat High Court in Indsur Global Ltd. vs Union of India- 2014 (310) ELT 833 (Guj.) and, therefore, the demand needs to be set aside. 10. In Indsur Global the Gujarat High Court has held as under : "34. By no stretch of imagination, the restriction imposed under sub-rule (3A) of Rule 8 to the extend it requires a defaulter irrespecti....

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....dy paid by him would be a restriction so harsh and out of proportion to the aim sought to be achieved, the same must be held to be wholly arbitrary and unreasonable. We may recall, the delegated legislature in its wisdom now dismantled this entire mechanism and instead has provided for penalty at the rate of 1% per month on delayed payment of duty. 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." 11. Against the ....