2013 (10) TMI 1095 - AT - Central Excise

Tribunal overturns decision on Cenvat credit disallowance and penalty, stresses compliance

COMMISSIONER OF CENTRAL EXCISE Versus PARVATI AGRO PLAST

The Tribunal allowed the appeal, setting aside the lower appellate authority's decision and upholding the restoration of the adjudicating authority's ... Refund Claim u/s 11B – Suo-moto Credit – Held that:- The payment made has to be considered as voluntarily paid - when the appellant realized that he had made the payment of duty wrongly, he should have filed a refund claim in accordance with the provisions of Section 11B - The payment was made in July 2001 and re-credit has taken in November, 2002 - One year time for filing the refund claim from the date of payment had already lapsed - to overcome the provisions of time bar, the appellant resorted to taking suo motu credit - There is no provision in Central Excise law for taking suo motu credit – Following BDH INDUSTRIES LTD. Versus COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I [2008 (7) TMI 78 - CESTAT MUMBAI] - taking of suo motu credit by the appellant was not in accordance with the law. CCE Versus M/s HARI CHAND SHRI GOPAL [2010 (11) TMI 13 - SUPREME COURT OF INDIA] - a provision for exemption, concession or exception, as the case may be, has to be construed strictly and if the exemption is available only on complying with certain conditions, the conditions have to be complied with - detailed procedures have been laid down in Chapter X of the Rules, so as to curb the diversion and mis-utilization of goods which are otherwise excisable and the plea of substantial compliance or intended use therefore has to be rejected – order set aside – Penalty upheld – Decided in favour of Revenue. Issues:- Differential excise duty on clearances to a related person- Legality of taking suo motu credit of wrongly paid duty- Applicability of Section 11B of the Central Excise Act, 1944- Compliance with Central Excise law regarding re-creditAnalysis:1. Differential excise duty on clearances to a related person:The case involved a dispute regarding the payment of differential excise duty by a manufacturer on clearances made to a related person. The appellant contended that the duty was wrongly demanded as per the directions of the Superintendent, and subsequently, a circular clarified that no duty was payable in such circumstances. The lower appellate authority held that there was no basis for the duty to be paid at 115% of the cost of production, and the re-credit of the amount could not be denied. The department failed to provide evidence to support the duty payment requirement, leading to the appeal being allowed in favor of the appellant.2. Legality of taking suo motu credit of wrongly paid duty:The appellant took suo motu credit of the duty paid after realizing that it was not required to be paid. However, the Revenue argued that there was no provision for taking such credit and that a refund claim should have been filed under Section 11B of the Central Excise Act, 1944. The Tribunal held that the appellant's action of taking suo motu credit was not in accordance with the law, citing precedents and emphasizing strict compliance with legal provisions. The Tribunal set aside the lower appellate authority's decision and upheld the imposition of a penalty on the respondent.3. Applicability of Section 11B of the Central Excise Act, 1944:The Revenue contended that the appellant should have followed the refund claim process under Section 11B to recover the duty wrongly paid. However, the Tribunal found that the time limit for filing a refund claim had lapsed, and the appellant's resort to taking suo motu credit was not permissible under Central Excise law. The Tribunal emphasized the need for strict compliance with legal procedures and rejected the argument in favor of granting the appellant the benefit of credit for the duty wrongly paid.4. Compliance with Central Excise law regarding re-credit:The Tribunal highlighted the absence of a provision for taking suo motu credit in Central Excise law and referenced previous judgments to support the decision to set aside the lower appellate authority's order. The Tribunal upheld the restoration of the adjudicating authority's order, including the imposition of a penalty on the respondent. The decision emphasized the importance of adhering to legal provisions and procedures laid down in the Central Excise Act, 1944.In conclusion, the Tribunal allowed the appeal, set aside the lower appellate authority's decision, and upheld the restoration of the adjudicating authority's order regarding the disallowance of the Cenvat credit and the penalty imposed on the respondent. The case underscored the significance of strict compliance with legal provisions and procedures in matters concerning excise duty payments and credits.