Demand of Entire Delayed Payment in Cash Rule 8 (3A) of Central Excise Rule is not valid: CESTAT [Read Order]

Demand - Payment - Delayed Payment - Cash - Central Excise Rule - CESTAT - Customs - Excise - Service Tax - Taxscan

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) the demand for entire delayed payment in cash Rule 8 (3A) of Central Excise Rule, 2002 is not valid.

Indus Tropics, the appellant is a company engaged in the business of manufacturing excisable goods. The appellant has been holding the required central excise registration under the Central Excise Act and has been clearing the goods on payment of central excise duty as required under the Central Excise Act. The appellant has been maintaining all the statutory records like RG-1, Invoices, and Monthly returns was also filed as required.

It has been alleged by the department that the appellant has cleared the finished goods namely Plywood & Veneer valued at Rs. 13,29,26,801/- for home consumption on which central excise duty amounting to Rs. 1,47,38,289/- was payable. The appellant paid central excise duty of Rs. 83,20,396/- by utilizing cenvat credit as against the total liability of Rs.1,47,38,289/-. The balance amount was paid by the appellant in cash from their PLA account. 

The department stated that the appellant failed to make full payment of duty within the prescribed time limit as provided under Rule 8 of Central Excise Rules, 2002 and since the appellant defaulted in payment of excise duty in terms of Rule 8(1) and Rule 8(3) of the said rules, therefore, as per the provisions of Rule 8 Sub-rule (3A) of Central Excise Rules, 2002 the appellant should have paid the entire default amount of Rs. 1,41,36,316/- from their PLA account (in cash). 

In the case of Indsur Global Ltd (supra), Gujarat has struck down Rule 8(3A) of Central Excise Rules, 2002 as unconstitutional. Tin light of various judgements, the two-member bench comprising Mr Ramesh Nair and Mr C L Mahar allowed the appeal and set aside the impugned order.

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