2023 (7) TMI 1237 - AT - Central Excise

Tribunal upholds tax department decision on Cenvat credit penalty appeal. Refund process & dues appropriation clarified.

The Tribunal upheld the decision of the Adjudicating Authority, ruling in favor of the tax department. The appellant's appeal against the penalty imposed ... Refund claim - Availment of excess credit - inputs supplied to 100% EOU by not following the formula prescribed under Rule 3(7)(a) of Cenvat Credit Rules, 2004 - allegation that appellant had not paid excise duty of Rs. 54,796/- on the removal of samples of medicines taken out for the purpose of testing/ chemical examination - whether the original adjudicating authority of the refund claim was required to issue a show cause notice before appropriation of the confirmed dues or not? HELD THAT:- It is a matter on record that amount of duty and penalty which has been confirmed by the Additional Commissioner vide his order dated 07.01.2010 has already attained finality. The appeal filed by appellant against this order has already been rejected by the Commissioner (Appeals) - there are no order of this Tribunal on the confirmed dues as per the order of Additional Commissioner dated 07.01.2010. It is a matter on record that Assistant Commissioner processed the refund claim of the appellant and thereafter the entire amount which was deposited by them amounting to Rs. 7,49,664/- has been sanctioned and as per the provisions of Section 11 of Central Excise Act, 1944, the confirmed dues amounting to Rs. 5,89,662/- has been appropriated from the refund amount due to the appellant. There are no legal short-coming in the order of the Adjudicating Authority. As there are no stay on the confirmed dues and as per the provisions of Central Excise Act, 1944, the officer sanctioning the refund is authorised to make deductions of any tax dues which are recoverable from the appellant. In the case of COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS GAHOI FOODS PVT. LTD. [2004 (11) TMI 147 - CESTAT, NEW DELHI]), the Tribunal has held that the Deputy Commissioner was justified in adjusting the amount of refund against the pending demand. The appeals are without any merit and deserve to be dismissed - appeal dismissed. Issues:The issues involved in the judgment are the incorrect availing of Cenvat credit, non-payment of excise duty on samples, and the refund claim process.Incorrect Availment of Cenvat Credit:The appellants were issued a show cause notice for taking excess Cenvat credit without following the prescribed formula. The order-in-original found that the Cenvat credit was availed correctly up to a certain date, and the amendment in the formula could not have retrospective effect. However, a portion of the credit was deemed wrong, leading to a penalty imposition under Rule 15. The Commissioner (Appeals) rejected the appeal against this order.Non-Payment of Excise Duty on Samples:The issue of non-payment of excise duty on samples of medicines taken outside the factory was raised. An amount was demanded for the samples, which was to be appropriated from the duty already paid. The order-in-original also imposed a penalty in this regard.Refund Claim Process:The appellant sought a refund after a significant portion of the demand was dropped. The Assistant Commissioner processed the refund claim and allowed a partial refund after deducting the confirmed demand towards the wrong availment of Cenvat credit and penalty. The appellant appealed against this order, arguing that the principles of natural justice were not followed.The Tribunal held that the original adjudicating authority was not required to issue a show cause notice before appropriating the confirmed dues. The confirmed dues had already attained finality, and the officer sanctioning the refund was authorized to deduct any tax dues recoverable from the appellant. Citing relevant legal precedents, the Tribunal found no legal shortcoming in the order of the Adjudicating Authority and dismissed the appeals, stating they were without merit.