Court allows re-credit of Cenvat account as voluntary deposit. Anticipatory credit deemed illegal. Notice issued.

The Court allowed the concerned applicants to re-credit the Cenvat account, treating the amount as a voluntary deposit to be returned as initially paid. The petitioner's anticipatory credit under the Central Goods and Service Tax Act, 2017, was deemed illegal, and the original adjudicating authority was directed to recover the unauthorized credit. The Court issued a notice returnable on 27th December, 2018, restraining coercive recovery pending further proceedings.

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Issues involved:
Rejection of rebate claim by Commissioner (Appeals) due to EOUs not having the option to pay duty and claim rebate, permission to re-credit Cenvat credit, legality of petitioner's suo motu re-credit, direction for recovery of unauthorized credit taken by petitioner, revenue neutrality.

Analysis:

1. The petitioner's rebate claim was rejected by the Commissioner (Appeals) on the basis that EOUs do not have the option to pay duty and then claim a rebate of the duty paid. However, the revisionary authority has allowed the concerned applicants to re-credit the Cenvat account, treating the amount as a voluntary deposit to be returned as initially paid. Despite the revision application pending since 2013, the petitioner, anticipating the Central Goods and Service Tax Act, 2017, took credit of the amount and sought to withdraw the revision application. The revisionary authority deemed this action as illegal and directed the original adjudicating authority to recover the unauthorized credit taken by the petitioner.

2. The petitioner's advocate argued that since the revisionary authority had allowed re-credit of the amount in the Cenvat account, it was unjustified to direct recovery solely because the petitioner had taken suo motu re-credit due to unique circumstances. The advocate contended that the situation was revenue neutral, indicating that there was no loss to the revenue department.

3. Considering the submissions made by the petitioner's advocate, the Court issued a notice returnable on 27th December, 2018. As an interim measure, the respondents were restrained from making any coercive recovery based on the impugned order. Direct service was permitted to ensure timely communication of the court's decision to the parties involved.

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