Appeal Granted: Excess Duty Adjustments Deemed Reasonable

The Tribunal allowed the appeal, highlighting the lack of suppression, reasonableness of adjusting excess duty paid, and absence of evidence for unjust enrichment. The appellant's practice of adjusting excess duty against subsequent liabilities was considered reasonable, especially since it was discontinued in May 2016. The appeal was allowed on grounds of limitation and merits, with consequential relief granted.

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Issues:
1. Whether the appellant is justified in availing suo moto credit of excess duty paid in the previous month on account of clearance of input under Rule 3(5) of Cenvat Credit Rules, 2004Rs.

Analysis:
1. The appellant, engaged in manufacturing various products, availed Cenvat Credit under Rule 3 of Cenvat Credit Rules, 2004. They outsourced services to M/s. Adonis Electronics Pvt. Ltd. for in-warranty and out-warranty products. The appellant adjusted excess Excise duty paid on in-warranty spares against duty payments for subsequent months. A show cause notice demanded Central Excise duty short paid in certain months, confirmed by the Adjudicating Authority. The appeal before the Commissioner (Appeals) was rejected.

2. The appellant's Chartered Accountant explained the procedure adopted, where excess duty paid on in-warranty spares was adjusted against future liabilities. The appellant discontinued this practice in May 2016. The appellant argued that excess payment can be adjusted against another clearance, citing Tribunal decisions. They also contended that the extended period is not applicable due to no intent to evade duty. The Revenue's Authorized Representative argued against the appellant's practice, stating it deviated from provisions and lacked statutory disclosure.

3. The Tribunal found that the Revenue was aware of the appellant's procedure since 2011. The Tribunal cited legal principles requiring positive action or deliberate withholding of information for duty liability. It was noted that the appellant filed periodic returns and provided information when requested. The Tribunal also considered the absence of suppression and fraudulent motive. The adjustment of excess duty paid in the previous month with subsequent liabilities was deemed reasonable, especially since the practice was discontinued in May 2016.

4. The Tribunal did not find any mention of unjust enrichment in previous orders or the show cause notice. The absence of evidence that the burden was passed on to the buyer led to the conclusion that the appellant's appeal should be allowed on grounds of limitation and merits. The appeal was allowed with consequential relief.

In conclusion, the Tribunal allowed the appeal, emphasizing the lack of suppression, the reasonableness of adjusting excess duty paid, and the absence of evidence for unjust enrichment.

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