Proceedings under rule declared unconstitutional by HC in invalid

Brief of the case:

The CESTAT Mumbai in the case of Vipul-S Plasticrafts P. Ltd. vs. Commissioner of Central Excise held that when the rule under which duty is sought to be demanded itself has been struck down as unconstitutional by various High Courts, the show-cause notice which are based upon rule 8(3A) cannot survive and are liable to be set aside.

Facts of the case:

♣ The assessee is engaged in manufacturing of plastic and automobile parts falling under Chapter heading 87 in first schedule of Central Excise Tariff Act, 1985 and they are availing Cenvat Credit on inputs/capital goods and input services and paying Central Excise duty on finished goods.

♣  During the period Nov.2007 to Feb.2008 the assessee cleared excisable goods for which duty liability should have been cleared on 5th of Dec.2007 to March 2008. But due to financial crisis it could pay only part of the duty liability from Cenvat account. The balance amount payable through account current remained unpaid mainly due to heavy financial crunch and recession in the market and non-receipt of payment from customers.

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