2016 (11) TMI 915 - AT - Central Excise

Appellant's Challenge on Duty Demand for Double Payment Upheld

The appellant successfully challenged a duty demand after utilizing suo motu Cenvat credit for Education Cess and S&H Education Cess payments, ... Cenvat credit - suo motu Cenvat credit - utilisation of Cenvat credit for payment of cess - double payment of duty - reversal of Cenvat creditSuo motu Cenvat credit - utilisation of Cenvat credit for payment of cess - double payment of duty - reversal of Cenvat credit - Validity of suo motu Cenvat credit of Education Cess and S&H Education Cess taken after the assessee had earlier utilised Cenvat credit of basic excise duty for payment of those cesses and subsequently paid the cesses through PLA. - HELD THAT: - The Tribunal found on the record that the appellant had initially utilised its Cenvat credit account of basic excise duty for payment of Education Cess and S&H Education Cess, and thereafter discharged those cesses through PLA. That sequence resulted in the same cesses being effectively paid twice by the appellant. In those circumstances the appellant was entitled to take suo motu Cenvat credit of the Education Cess and S&H Education Cess which had been earlier debited from the Cenvat credit account of basic excise duty. The adjudicating authority's demand for reversal of the suo motu credit and imposition of interest and penalty was therefore not warranted. [Paras 2, 4]Impugned order demanding duty and imposing interest/penalty for the suo motu Cenvat credit is set aside and the appeal is allowed with consequential relief, if any.Final Conclusion: The Tribunal allowed the appeal, holding that where utilisation of the Cenvat credit account for payment of Education Cess and S&H Education Cess was followed by payment through PLA, the assessee was entitled to take suo motu Cenvat credit for the cesses; the demand and penalty were set aside. Issues:- Appeal against duty demand due to availment of suo motu Cenvat credit in Cenvat credit account.Analysis:The appellant, operating in Jammu & Kashmir under Notification No. 56/2002, availed Cenvat credit on basic Excise duty for inputs and cleared finished goods by paying duty through PLA and utilizing Cenvat credit account from April to September and November 2009. They used the Cenvat credit account for Education Cess and S&H Education Cess payment, which was later objected to by the Revenue. A show cause notice was issued for reversal of Cenvat credit of Education Cess and S&H Education Cess, leading to confirmation of duty demand with interest and penalty. The appellant challenged this order.Upon hearing the parties and examining the submissions, it was established that the appellant had indeed used their Cenvat credit account for Education Cess and S&H Education Cess payments, which were subsequently paid through PLA. This resulted in double payment of duty by the appellant. Therefore, the appellant rightfully took suo motu Cenvat credit for the Education Cess and S&H Education Cess paid by utilizing the Cenvat credit of basic Excise duty. Consequently, the proceedings against the appellant were deemed unwarranted, leading to setting aside of the impugned order and allowing the appeal with any consequential relief.This judgment clarifies the correct utilization of Cenvat credit accounts and the implications of double payment of duty. It highlights the importance of adherence to tax payment procedures and the validity of taking suo motu credit in specific circumstances. The decision provides clarity on the issue at hand and offers relief to the appellant based on the factual and legal analysis presented during the proceedings.