2024 (8) TMI 86 - AT - Central Excise

CENVAT Credit - only allegation is that suo moto recredit is not allowed under the Central Excise provisions - HELD THAT - The refund of any duty has to be claimed through Section 11B of the CEA 1944. Hence the question of suo-moto credit/refund is not admissible as any duty paid by the appellant has to be refunded only through the process of Section 11B of the Central Excise Act 1944. As rightly argued by the Revenue it has been categorically held by the Hon ble Supreme Court in the case of Mafatlal Industries 1996 (12) TMI 50 - SUPREME COURT Sahakari Khand Udyog Mandal Ltd. 2005 (3) TMI 116 - SUPREME COURT and by the Larger Bench in the case of BDH Industries Ltd. 2008 (7) TMI 78 - CESTAT MUMBAI-LB that unless the duty is held to be unconstitutional there is no question of claiming refund under any other provisions other than what is specified in the Central Excise Act, 1944. Therefore the fact that the appellant should not have taken recredit of duty but should have filed a refund claim under Section 11B of the Central Excise 1944. Time Limitation - HELD THAT - The refund claim could have been could have been filed at any given point of time. As rightly claimed by the appellant there is no suppression of fact as the amount of recredit taken by the appellant was clearly shown in their cenvat credit account. There is nothing on record to show that this fact was suppressed except for stating that it came to notice of the Department only at the time of audit and the impugned order does not mention anything on suppression or invoking of proviso to Section 11A for demanding duty beyond the normal period. The Commissioner (Appeals) in the impugned order does not deal with suppression nor has given any reasons to invoke proviso to Section 11A except for confirming the demand along with interest under Section 11AB and penalty under Section 11AC. In view of the above the demand being beyond the normal period cannot be sustained. There were conflicting decisions which ultimately got settled by the Larger Bench the question of suppression cannot be alleged against the appellant. Moreover since the duty was paid under protest there was no time limit for filing a claim of refund that itself proves the fact that the allegation of suppression cannot be established against the appellant. The impugned order is set aside - appeal allowed.

Summary

Issues:
1. Whether the appellant can take suo moto credit instead of filing a refund claim under the Cenvat Credit Rules, 2004.
2. Whether the appellant suppressed any facts with the intention to evade payment of duty.
3. Whether the demand confirmed by the authorities is sustainable.
4. Whether the appellant's action of taking recredit without following the prescribed procedure is justified.
5. Whether the appellant is liable for interest and penalty imposed by the authorities.

Analysis:

Issue 1:
The appellant, a manufacturer of motor vehicles, was issued a show-cause notice demanding duty collected on tractors cleared under exemption. The original authority set aside the demand, but the appellant took suo moto cenvat credit instead of filing a refund claim, leading to a subsequent show-cause notice demanding the irregularly availed credit. The Commissioner (Appeals) upheld the order, stating that a refund claim under Section 11B of the Central Excise Act, 1944 was necessary. The appellant argued citing precedents, but the Revenue contended that refund must be claimed under Section 11B. The judgment emphasized that refund must be claimed through Section 11B, and the appellant should have followed the prescribed procedure instead of taking suo moto credit.

Issue 2:
The Revenue alleged suppression by the appellant, stating that the act of taking suo moto credit without informing the department amounted to suppression with the intention to avail irregular cenvat credit. However, the appellant argued that there was no suppression as the recredit was shown in their cenvat credit account. The judgment noted that the impugned order did not address suppression or invoke provisions for demanding duty beyond the normal period. It concluded that the demand beyond the normal period could not be sustained, especially since the duty was paid under protest.

Issue 3:
The authorities confirmed the demand, citing non-admissibility of suo moto credit and reliance on legal precedents. The judgment highlighted conflicting decisions that were ultimately settled by the Larger Bench, indicating that the question of suppression could not be alleged against the appellant. It further stated that since the duty was paid under protest, there was no time limit for filing a refund claim, undermining the allegation of suppression. Consequently, the impugned order was set aside, and the appeal was allowed.

Issue 4:
The case revolved around whether the appellant's action of taking recredit without following the prescribed procedure was justified. The judgment emphasized the necessity of following Section 11B for claiming refunds, rejecting the appellant's argument based on precedents. It concluded that the appellant should have filed a refund claim instead of taking suo moto credit.

Issue 5:
The authorities imposed interest and penalty on the appellant. The judgment highlighted conflicting decisions and settled precedents, ultimately setting aside the impugned order and allowing the appeal with consequential relief, if any, as per law.

This comprehensive analysis of the judgment addresses all the issues involved, providing a detailed overview of the legal arguments and conclusions reached by the Appellate Tribunal.