PRECISION FASTENERS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The petitioners have challenged the vires of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002. They have also challenged the communications dated 9-9-2008 and 12-9-2008 as at Annexures-H and I respectively, under which the department raised the duty demand from the petitioners relying on such statutory provision. The petitioners have further challenged a show-cause notice as at Annexure-JJJ, under which the adjudicating authority proposed to levy Excise duty of Rs. 1,06,26,770/- with interest and penalty.

(2.) Sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, pertains to a situation where an assessee has not paid monthly excise duty by due date and has further defaulted by period of 30 days thereafter. Under such circumstances, sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, provides that the assessee would pay Excise duty on every individual clearance and that such payment would be without availing Cenvat credit available in the accounts of the assessee. It is undisputed that the duty demands under challenge as well as the impugned show cause notice arise out of this background and the department relies primarily on sub-rule (3A) of Rule 8 of the Central Excise Rules, 200

(3.) In a judgment dated 26/27-11-2014 in Special Civil Application No. 3344 of 2014 in case of Indsur Global Ltd. v. Union of India [2014 (310) E.L.T. 833 (Guj.)], this Court considered a similar challenge of the petitioner to the vires of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002. Portion of the said rule which provides that the assessee would clear the goods on payment of excise duty "without utilizing Cenvat credit" to the extent the group of words indicated in the inverted comma were declared ultra vires and unconstitutional. It was observed as under :