By TIOL News Service

ALLAHABAD, APR 16, 2016: ON scrutiny of ER-I Returns for the month of January, 2012 and February, 2012, it was noticed that the appellant had not paid the duty by the due date and some amount was in arrear which was paid later.

Revenue view is that the appellant could not have utilised the Cenvat credit as provided under Rule 8(3A) of CER and accordingly, was liable to pay the amount of Rs.2,63,792/- in cash along with interest and that penalty was also imposable.

The demand was confirmed along with equal amount of penalty under Rule 25 of CCR read with section 11 AC of the Act.

Having failed before the Commissioner (Appeals), the assessee is before the CESTAT and cites the Gujarat High Court decision in Indsur Global Limited - 2014-TIOL-2115-HC-AHM-CX where it is held that the portion of the Rule "without utilising the Cenvat credit" of sub-Rule 3(A) of Rule 8 of CER, 2002 is invalid and ultra-vires of the Constitution of India. Reliance is also placed on the Madras High Court decision in Malladi Drugs & Pharmaceuticals Ltd. - 2015-TIOL-1262-HC-MAD-CX, wherein following the ruling of Gujarat High Court and also relying on the ruling of Supreme Court in the case of Collector Vs. Dai IchiKarkaria Ltd. - 2002-TIOL-79-SC-CX-LB it was held that there is no case of availing the wrong/irregular credit & right to utilise such credit in paying duty cannot be taken away;that Rule 8(3A) being procedural prescribing manner and method of payment of duty cannot interfere with substantive rights provided in CCR, 2004. It is also pointed out that the Gujarat HC ruling was also followed by Punjab & Haryana High Court in the case of Sandley Industries Vs. Union of India: - 2015-TIOL-2490-HC-P&H-CX and wherein it was also taken note that with effect from 11/07/14 [Notfn. 19/2014-CE(NT)] the said words "without utilising the benefit of Cenvat credit" where deleted from Rule 8(3A) of the CER, 2002.

The AR did not have much to add.

The Bench observed that the facts in the present case are squarely covered by the Gujarat High Court ruling in the case of Indsur Global (supra).

The impugned order was set aside and the appeal was allowed.

(See 2016-TIOL-901-CESTAT-ALL)