2026-VIL-1704-CESTAT-BLR-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Short payment of cesses, short payment of interest, utilisation of CENVAT credit for payment of arrears of duty and penalties – Audit noticed short payments, irregular availment of CENVAT credit and short payment of interest. The Order-in-Original confirmed short payment of Education Cess and Secondary and Higher Education Cess with interest and equivalent penalty, and imposed other penalties under the Central Excise Act, 1944. The Commissioner (Appeals) upheld the order. The Appellant had short paid duties in several months and adjusted the amount from CENVAT credit earned in the succeeding months by declaring the same as payment of arrears. The Appellant contended that such payment is permissible under Rule 8(3A) of the Central Excise Rules, 2002 as amended w.e.f. 11.07.2014 and that the delay was due to financial constraints. The Revenue contended that, as per the proviso to Rule 3(4) of the CENVAT Credit Rules, 2004, credit can be utilised only to the extent available on the last day of the month, and that the Appellant, having accepted the liability for the cesses, is liable to equivalent penalty under Section 11AC - Whether the penalties imposed for delayed payment of duty, short payment of interest and short payment of cesses are sustainable - HELD - The Appellant had paid the entire amount along with interest as applicable. The issue of delayed payment and penalty was considered in the Appellant's own case, wherein it was held that Rule 8(3A) was held ultra vires as unconstitutional by the High Court in Indsur Global Ltd, which was followed by the Jurisdictional High Court and by the Tribunal. Following judicial discipline, the demand under Rule 8(3A) could not be sustained. Considering the facts and the ratio of the decision in the Appellant's own case, the appropriation of the amount paid by the Appellant is upheld and the penalties are set aside - The appeal is partly allowed
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