2017 (1) TMI 593 - AT - Central Excise

Appellate tribunal restores credit amount to company, emphasizes conditions for credit availment

Precision Metal Products Pvt Ltd Versus Commissioner of Central Excise, Mumbai - V

Precision Metal Products Pvt Ltd Versus Commissioner of Central Excise, Mumbai - V - TMI Issues:Refund claim rejection based on delayed credit availed by the appellant.Analysis:The appellant, M/s Precision Metal Products Pvt Ltd, filed a refund claim of Rs. 9,27,776 before the Assistant Commissioner of Central Excise, Kandivali Division, which was rejected by the authority. The appellant had imported capital goods and inputs between 2006-07 to 2010-11 but had not availed the credit of special additional duty (SAD) paid due to ignorance. The appellant eventually reversed the credit on advice from Central Excise authorities. A show cause notice was issued alleging subterfuge in the refund claim process. The refund claim was rejected as the credit was not availed immediately upon receipt of inputs within the factory. The appellant sought restoration of the credit, arguing that the Rules do not prescribe an outer limit for availment of credit. The lower authorities erred in denying restoration of credit, and the appellate tribunal allowed the appeal by restoring the credit amount.The show cause notice issued had unusual proposals and insinuations, questioning the appellant's refund claim process. The notice alleged that the appellant wrongly availed credit and reversed it to avoid penal action, leading to the refund claim. The notice lacked clarity on the provision applicable to the refund claim. The appellant admitted to the credit taken on SAD paid for capital goods and inputs over five years but had not utilized the credit. The original authority and first appellate authority failed to note that the appellant sought approval for restoration of the credit taken and reversed. The appellant argued for restoration of credit, while the Authorized Representative opposed it. The tribunal found the interpretation of lower authorities erroneous, stating that as long as the conditions for credit availment are fulfilled, there should be no issue with the availment process.The Central Board of Excise & Customs clarified that there is no specific time limit for availing CENVAT credit on inputs in the factory. The tribunal referred to a previous case involving the entitlement of credit on fuel, emphasizing that no outer time limit is prescribed for credit availment. The tribunal cited various cases where the absence of a time limit for credit availment led to the allowance of credit even after a significant period. The decisions cited by the Authorized Representative regarding unjust enrichment were deemed irrelevant as no refund in cash was at issue in this dispute. The tribunal allowed the appeal by restoring the credit of Rs. 9,27,776, as the original and appellate authorities erred in denying the restoration of credit to the appellant.