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2026 (2) TMI 667
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....ntral Excise Rules, 2002. Therefore, as per Rule 8(3A) of the Central Excise Rules, 2002, the appellant was required to pay excise duty for each consignment at time of removal without utilizing the Cenvat credit till the appellant pays outstanding amount including interest thereon. In the event of failure, it shall be deemed that such goods have been cleared without payment of duty and consequences shall follow. 1.2 The department issued a show cause notice dated 17.02.2011 asking them to pay Central Excise of Rs. 26,74,513/- under proviso to Section 11A of the Central Excise Act, 1944 alongwith interest under Section 11AB and penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. The said show cause notice was adjudicated by the Additional Commissioner vide order dated 28.01.2012 who confirmed the above duty under Section 11A along with interest under Section 11AB and imposed penalty equal to duty amount under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the said Act. Aggrieved with the above order, the appellant filed appeal before the Commissioner (Appeals) who vide impugned order dated 07.08.2012....
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.....), wherein it was observed that where goods are cleared under the cover of invoices and the only default is delay in payment of duty, Provisions of Rule 27 would get attracted and not Rule 25 or Section 11AC. Similar finding was given by the Tribunal in the case of CCE, Allahabad v. R.K. Cigarettes (P) Ltd. reported in 2007 (3) LCX 22, M/s Asoj Soft Caps P Ltd decided vide Order No. A/514-515/WZB/AHD/2011 dated 11/03/2011 and M/s Saligram Laminates P. Ltd Vs CCE, Ahmedabad reported in 2009 (247) ELT 649 (Tri. Ahmd.). In view of the above, the appellant requested to set aside the impugned order and allow their appeal. 3. During arguments, learned Advocate mentioned that the issue has already been decided by Hon'ble Gujarat High Court in the case of Indsur Global Ltd Vs. UOI reported at 2014 (310) ELT 833 (Guj.) wherein, Rule 8 (3A) of the Central Excise Rules, 2002 has been held as ultra vires and therefore, demand confirmed by the lower authorities and the penalty of equal amount imposed against them is not sustainable. He also relied on the decision of Hon'ble Calcutta High Court in the case of Commissioner of CGST and Central Excise, Howrah Vs. Hindustan Windows Manufactur....
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....ras 34,35 & 36 of the said decision is reproduced below:- "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. 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....
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.... under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 which has been challenged by the appellant. We agree with the contention of the appellant that penalty under Rule 25/Section 11AC is not imposable on them as intention to evade payment of duty is absent because goods have been removed on invoices against payment of duty. However, as discussed, provisions of Rule 8 have been contravened, for which we hold the appellant liable to pay penalty under Rule 27 of the Central Excise Rules, 2002. The appellant has pleaded that Rule 27 has not been invoked in this case for imposing penalty. However, there are a number of decisions where it has been held that mentioning wrong provision or not mentioning provision does not vitiate the proceedings. We rely on the following orders. (a) Karnawat International Pvt Ltd. Vs. Commissioner of Customs, Mundra reported at (2024) 25 Centax 24 (Tri.- Ahmd.). Para 4.8 is reproduced below:- "It has been held in various judicial pronouncements that mere mentioning of wrong provisions or not mentioning of it does not vitiate the proceedings till the time statutory authority has requisite a....