M/S. Space Telelink Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 239  244/ CE/ DLH/ 2013 dated 10/01/2014 passed by Commissioner of Central Excise (Appeals), Delhi]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Space Telelink Ltd. Appellants

Shri Ankit Goel, Managing Director

Vs.

Commissioner of Central Excise Respondent

Delhi I

Appearance:

Shri V R Sethi, Advocate for the Appellants

Ms. Ranjana Jha, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 29.06.2015

ORDER NO. FO/52109-52114/2015-Ex(SM)

Per Ashok Jindal :

The appellants are in appeals against the impugned orders wherein the denial of Cenvat Credit has been held confirmed and penalties on main party and Director of main party have also been confirmed.

2. The facts of the case are that the main appellant M/s. Space Telelink Ltd. has defaulted in making payment of Excise duty within 30 days and thereafter they utilized Cenvat Credit account for payment of Central Excise duty which was not entitled to them as per Rule 8(3 A) of the Central Excise Rule, 2002. Therefore, proceedings were initiated and three different show cause notices were issued to the respondent wherein they have utilized Cenvat Credit for payment during the default period. Later on, the appellant paid the duty through PLA along with interest and sought Cenvat Credit on duty paid. The Revenue is of the view that as they have defaulted in making payment in time and they were not entitled to utilize Cenvat Credit account for payment of duty during default period. In these circumstances, they have contravened the provisions of Rule 8 (3A) of Central Excise Rule, 2002. Therefore, they are not entitled to take Cenvat Credit of duty paid. In these set of facts, three show cause notices were issued to the appellant to deny the cenvat credit and consequently to impose penalties on the main appellant as well as Managing Director of the main appellant. Both the lower authorities confirmed the proposal of the show cause notice by way of denial of cenvat credit and imposed various penalties on the appellant and co-appellant. Learned Commissioner (Appeals) only reduced the penalty in the case of Managing Director.

3. Learned Counsel of the appellant submits that the Honble Gujarat High Court in the case of Indsur Global Ltd. vs. Union of India [2014(310) ELT 833 (Guj)] has held that provisions of Rule 8 (3A) of Central Excise Rule, 2002 is unconstitutional. Therefore, Cenvat credit cannot be denied. He further submits that there was procedural lapse on the part of the assessee, therefore, the penalty can be imposed under Rule 27 of Central Excise Rules, 2002 on the main appellant upto maximum of Rs. 5000/- and it is not a case for imposition of penalty on the Director. He further submits that in their own case in Appeal No. 53516  53517/2014 dated 10.6.2015, this Tribunal has already decided the issue holding that appellant is entitled to avail cenvat credit of duty paid relying upon the decision of Indsur Global Ltd. and penalty of Rs.5,000/- was confirmed under Rule 27 of Central Excise Rules, 2002 against the appellant and penalty on the Director was set aside. Therefore, submissions be considered accordingly.

4. On the other hand, learned AR opposed the contention of the learned Counsel and submits that various High Courts has confirmed the contravention under Rule 8(3A) of the Rules, 2002 in the following cases:-

1. M/s. Bakewell Agro Ltd. vs. CCE Meerut

[2014-TIOL-1975-HC-ALL-CX]

2. M/s. Saehan Stamping Pvt. Ltd. vs. CCE Chennai

[2014-TIOL-1840-HC-MAD-CX]

3. Sri Sivasakthi Auto Ancillaries Madras Pvt. Ltd. vs CCE Chennai

[2014-TIOL-1443-HC-MAD-CX]

4. Unirols Airtex vs. Asst. Commr.of C Ex., Coimbatore

[2013 (296) ELT 449 (Mad)]

5. In the case of Bakewell Agro Ltd., the decision has been given by the Honble High Court of Allahabad which is near to the Bench seating in New Delhi as comparable to the decision of Honble Gujarat High Court, in the case of Indsur Global Ltd. (supra) therefore, the decision of the Honble the High Court which is nearer to Delhi has to be followed. She also relied on two decisions of this Tribunal namely, Alphine Pharmaceuticals vs. CCE Hyderabad [ 2013 (291) ELT 425 ( Tri-Bang) ] and Mauli Steel Pvt. Ltd. vs. CCE Aurangabad [2014 (314) ELT 158 ( Tri-Mum)] wherein the provisions of Rule 8 (3A) of Central Excise Rules, 2002 were upheld and contravention committed by the assessee were upheld and consequences were directed to be followed. She further, submits that she has not seen the decision in the appellants own case decided by this Tribunal on 10.6.15 and cannot comment on that and whatever arguments she has made be considered after going through the appellants submissions. She further submits that the impugned appeals pertains to the period prior to the decision of Indsur Global Ltd. (supra) which is not applicable to the facts of this case. She also submits that Revenue has challenged the decision of Indsur Global Ltd. (supra) before the Honble Apex Court. Therefore, the said decision cannot be followed as the issue is in jeopardy.

6. Heard the parties. Considered the submissions.

7. I have gone through the case law relied upon by the learned AR before me. In all of them, the constitutional value of Rule 8 (3A) of Central Excise Rules, 2002 was not the issue before the Honble High Court. Moreover, all these decisions have been passed by Honble High Court prior to the decision of Indsur Global Ltd. (supra). As Honble High Court of Gujarat as held provisions of Rule 8(3A) of Central Excise Rules, 2004 to be unconstitutional on 27.11.2014 and decisions of this Tribunal cited by learned AR have been passed by the Tribunal prior to Indsur Global Ltd. (supra). In these circumstances, the only decision available before me wherein the constitutional validity of Rule 8(3A) of Central Excise Rules, 2002 has been decided by Honble High Court is Indus Global (supra). To maintain judicial discipline, I am bound to follow the decision of Gujarat High Court in the case of Indsur Global Ltd. (supra). Therefore, I hold that as Rule 8(3A) of Central Excise Rules, 2002 has been declared unconstitutional, consequently proceedings against the appellant are not sustainable. Further I find that appellant has contravened the provisions of Central Excise Rules, 2002, therefore, general penalty under Rule 27 of Central Excise Rules, 2002 is imposable. Therefore, I impose penalty under Rule 27 of Central Excise Rules, 2002 on the main appellant i.e. M/s. Space Telelink Ltd. of Rs.5,000/- (Rupees Five thousand only). Further, I hold that the Managing Director has not contravened, penalty on Managing Director are set aside.

8. With these observations, following orders have been passed.

A) The appellant is entitled to avail Cenvat Credit of duty paid by them.

B) Penalty of Rs.5,000/- (Rupees Five thousand only) is confirmed on M/s. Space Telelink Ltd. under Rule 27 of Central Excise Rules, 2002 and

C) Penalties on Shri Ankit Goel, Managing Director are set aside.

8. Appeals are disposed of in the above terms.

(Dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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