2018 (10) TMI 696 - AT - Central Excise

Appellant wins CENVAT credit dispute for aerated water manufacturing, citing judicial precedents

The appellant, engaged in manufacturing aerated water and sweetening beverages, availed CENVAT credit without supporting documents as required by the ... CENVAT Credit - Suo moto credit taken on excess credit debited by appellant - denial on the ground that credit availed without any supporting documents as prescribed under CENVAT Credit Rules, 2004 - Held that:- It is clear that the appellants had adjusted higher amount from the CENVAT credit amount towards discharging duty liability for the months of July and November 2012. Later, realizing the mistake, they had taken suo moto credit of the excess CENVAT amount debited by them. The department has denied the suo moto credit alleging that there are no proper documents for availing the credit for the second time - this allegation by the department is erroneous for the reason that for the second time, the appellants have taken the credit only because they had made a wrong book entry at the initial stage. This does not amount to availing credit for second time. The Hon’ble Karnataka High Court in the case of Motorola India Pvt. Ltd. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE] had earlier held that the mistake of debiting the amount in the CENVAT credit can be corrected by the assessee later. The allegations in the show cause notice cannot sustain - appeal allowed - decided in favor of appellant. Issues:1. Availment of CENVAT credit without supporting documents.2. Eligibility of suo moto credit for excess duty paid.3. Interpretation of CENVAT Credit Rules, 2004 regarding credit availed.Issue 1: Availment of CENVAT credit without supporting documents:The appellants were engaged in manufacturing aerated water and sweetening beverages and availed CENVAT credit without supporting documents as required by the CENVAT Credit Rules, 2004. The department alleged that the credit availed was ineligible due to lack of documentation, leading to a show cause notice for recovery of the amount along with interest and penalties. The original authority and Commissioner (Appeals) upheld the demand. The appellant explained that the excess duty paid in July 2012 and November 2012 was adjusted inadvertently, resulting in the incorrect availing of CENVAT credit without proper documentation.Issue 2: Eligibility of suo moto credit for excess duty paid:The appellant argued that the suo moto credit taken for the excess CENVAT amount debited was justified as it was a correction of a book entry error and not a second availing of credit. The department contended that the only remedy for excess duty paid was to file a refund claim and that there was no provision for suo moto credit under the Central Excise Act. The appellant cited decisions by the Hon'ble Karnataka High Court and jurisdictional High Court to support the eligibility of suo moto credit for correcting inadvertent errors in availing CENVAT credit.Issue 3: Interpretation of CENVAT Credit Rules, 2004 regarding credit availed:The Tribunal analyzed the case in light of previous judicial decisions, including the Larger Bench decision in BDH Industries Ltd., which held that the assessee cannot take suo moto credit. However, the Tribunal referred to the Karnataka High Court decision and the jurisdictional High Court decision, which supported the correction of mistakes in CENVAT credit availed through suo moto credit. The Tribunal ultimately ruled in favor of the appellant, setting aside the impugned order and allowing the appeal based on the precedents set by the High Courts regarding the correction of inadvertent errors in availing CENVAT credit.This detailed analysis of the judgment highlights the issues of CENVAT credit availment, eligibility of suo moto credit, and the interpretation of relevant rules and legal precedents in the case.