2017 (7) TMI 278 - AT - Central Excise

Tribunal confirms demands for credit availed due to software error

The tribunal upheld the lower authorities' decision, confirming demands raised against the appellant for availing suo motu credit against a debited amount ... Suo-moto the re-credit of such amount debited erroneously - due to error in software, debited amount against clearances effecting by following notification No.108/95 - whether the appellant was correct in availing suo motu credit of ₹ 30,02,093/- on the ground that it was debited inadvertently or otherwise? - Held that: - similar issue came up for decision of Tribunal for consideration of the bench in the case of S. Subrahmanyan & Co. [2011 (3) TMI 396 - CESTAT, AHMEDABAD)], wherein it was held that the amount paid by mistake cannot be termed as duty - suo motto credit of Cenvat can be allowed if there is no dispute as to availment of Cenvat Credit in the first place i.e. original Cenvat Credit is not contested - appeal allowed - decided in favor of appellant. Issues:1. Availing suo motu credit against debited amount due to software error.2. Interpretation of notification No.108/95 for exemption.3. Requirement of documents for availing credit.4. Comparison with previous tribunal decisions.5. Applicability of Section 11-B for refund.6. Legal validity of reversing Cenvat credit entry.7. Judicial precedents on similar cases.Issue 1: Availing suo motu credit against debited amount due to software errorThe appellant, a manufacturer of telecommunication equipment, debited an amount due to a software error. The appellant availed suo motu credit for the debited amount, which was questioned by the authorities. The lower authorities confirmed the demands raised with interest and imposed a penalty. The appellant contended that the debited amount was not against any due liability and was erroneously debited. The tribunal considered the issue of availing suo motu credit and examined the legality of such action.Issue 2: Interpretation of notification No.108/95 for exemptionThe appellant claimed exemption under Notification No.108/95 for clearances to a specific entity. The appellant argued that clearances under this notification, though exempted, are considered as exports, hence no reversal of 10% of the value of goods cleared was required. The tribunal analyzed the interpretation of the notification and its applicability to the appellant's case, considering similar issues in previous tribunal decisions and high court judgments.Issue 3: Requirement of documents for availing creditThe departmental representative raised concerns regarding the appellant's availing of credit without proper documentation as per rules. It was argued that the appellant should have followed the refund procedure under Section 11-B instead of taking suo motu credit. The tribunal deliberated on the necessity of documentation for availing credit and the correct procedure to be followed in such cases.Issue 4: Comparison with previous tribunal decisionsBoth parties referred to previous tribunal decisions to support their arguments. The tribunal examined the relevance of these decisions, including the case of BDH Industries Ltd., in determining the legality of availing suo motu credit. The tribunal considered the consistency of its decisions with past precedents and the applicability of such judgments to the current case.Issue 5: Applicability of Section 11-B for refundThe tribunal discussed the applicability of Section 11-B for claiming a refund in cases of erroneously debited amounts. The appellant's argument was based on the interpretation of Section 11-B and the necessity of following the prescribed procedure for refunds. The tribunal evaluated whether the appellant's actions aligned with the requirements of Section 11-B and related legal provisions.Issue 6: Legal validity of reversing Cenvat credit entryThe tribunal analyzed the legal validity of reversing a Cenvat credit entry due to an inadvertent debit by the appellant. The tribunal examined the implications of such reversals, considering the nature of the error and the subsequent correction made by the appellant. The tribunal assessed whether the reversal of the credit entry was justified in the given circumstances.Issue 7: Judicial precedents on similar casesThe tribunal reviewed judicial precedents on similar cases to determine the legality of availing suo motu credit and reversing Cenvat credit entries. References were made to judgments of high courts and previous tribunal decisions to support arguments presented by both parties. The tribunal considered the consistency of its decision with established legal principles and interpretations provided in relevant case laws.