CESTAT quashes Excise Duty Demand, invalidates Restriction on Cenvat Credit Utilization during Default [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the excise duty demand, invalidates restriction on Cenvat credit utilization during default.

The appellant in the present matter is M/s. Superol Industrial Lubricant. A show cause notice was issued alleging contravention of the provisions of Rule 8(3A) read with Rule 8(1) and Rule 8(3) of the Central Excise Rules, 2002 read with Rule 3(4) of the Cenvat Credit Rules, 2004 and also Rule 12 of the Central Excise Rules, 2002.

It is the case of the Department that the assessee inasmuch as continued to clear the excisable goods availing the facility of duty payment on instalment basis not resorting to consignment wise payment of duty from account current by not utilizing Cenvat Credit during the period subsequent of their default in payment of the Central Excise duty along with an obvious intention to evade payment of duty.

The appellant has paid the entire duty through Cenvat Credit along with interest. It is their submission in the grounds of appeal that the Commissioner should have appreciated that the provisions of Rule 8(3A) of the Central Excise Rules, 2002 would apply only till the date the assessee pays the outstanding amount including the interest thereon.

In the case of Indsur Global Ltd. v. Union of India, it was held that “without utilizing Cenvat Credit” under Rule 8(3A) of the Central Excise Rules, 2002 as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the appellant.

The Tribunal of PK Choudhary, Judicial Member and K Anpazhakan, Technical Member observed that “We find that the demand in the instant case has been raised for contravention of Rule 8(3A) of the Central Excise Rules, 2002 restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count.”

To Read the full text of the Order CLICK HERE

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