2015 (9) TMI 1375 - AT - Central Excise

Tribunal Upholds Credit Entry Legality, Rejects Duty Payment Claim

The Tribunal dismissed the appellant-Revenue's appeal challenging the respondent's taking of suo moto credit, emphasizing the legality of the credit entry ... Suo moto availment of credit - whether suo motu re-credit of the credit already reversed is permissible and no refund claim is required to be filed - Held that:- The issue is no more res integra in view of the judgment of Hon’ble Madras High Court in the case of ICMC Corporation (2014 (1) TMI 1473 - MADRAS HIGH COURT) - Taking of credit on the basis of available documents, without disputing their genuineness, cannot be equated with the case of self refund. - There is no stipulation in the Cenvat statute that an assessee is required to obtain prior permission from the jurisdictional Central Excise authorities for making any debit entry in the Cenvat records. Hence, in absence of any specific prohibition to that effect, it is not appropriate to disallow the Cenvat benefit, to which the respondent is statutorily entitled to. This Tribunal in the case of Visakhapatnam Steel Plant v. CCE [2002 (3) TMI 169 - CEGAT, BANGALORE] has held that correction of errors and omissions in the entries would not require permission of the Department. - Decided against Revenue. Issues:1. Whether the appellant-Revenue can disallow the taking of suo moto credit by the respondent without provisions in the Cenvat Credit Rules, 2004Rs.2. Whether the reversal of credit due to non-availability of documents amounts to payment of duty under Section 11BRs.3. Whether the respondent's action of taking credit on its own without disputing document genuineness is equivalent to self-refundRs.4. Whether prior permission is required for making debit entries in Cenvat recordsRs.5. Whether the case law cited by the Revenue supports their argument against the respondentRs.Issue 1:The appellant-Revenue challenged the respondent's taking of suo moto credit without specific provisions in the Cenvat Credit Rules, 2004. The appellant argued that self-refund is not authorized by law. However, the respondent contended that the relevant duty paid documents were available when the credit was taken. The Tribunal noted that the disputed Cenvat credit had not been utilized for paying duty on the final product, making it more of a book entry than actual duty payment. The Tribunal referenced the BDH Industries case but found it not directly applicable to the current situation.Issue 2:The question arose whether the reversal of credit due to non-availability of documents constituted payment of duty under Section 11B. The respondent argued that the reversal did not amount to duty payment and cited various judgments supporting their stance. The Tribunal agreed with the respondent, emphasizing that the credit entry without utilization cannot be equated with self-refund as claimed by the appellant-Revenue.Issue 3:The issue of whether the respondent's action of taking credit on its own without disputing document genuineness equated to self-refund was examined. The Tribunal highlighted the judgment of the Hon'ble Madras High Court in the ICMC Corporation case, which supported the respondent's position. The Tribunal concurred with the lower authorities that taking credit based on available documents does not necessitate a refund claim.Issue 4:Regarding the requirement of prior permission for making debit entries in Cenvat records, the Tribunal clarified that there is no stipulation in the Cenvat statute mandating such permission. Citing a previous case, the Tribunal emphasized that corrections in entries do not need Department permission, and disallowing Cenvat benefit without specific prohibition would be inappropriate.Issue 5:The appellant-Revenue relied on case law to support their argument against the respondent. However, the Tribunal found that the case law cited did not align with the present case's circumstances. The Tribunal highlighted the decision of the Hon'ble High Court of Madras, which held that a refund claim under Section 11B cannot be insisted upon for making a reverse entry in the Cenvat account when there is no outflow of funds from the assessee.In conclusion, the Tribunal dismissed the appeal filed by the appellant-Revenue against the impugned order, finding no merit in the arguments presented. The judgment emphasized the legality of taking credit based on available documents and the absence of a requirement for prior permission for debit entries in Cenvat records.