Revenue appeal dismissed as assessee's suo motu re-credit of cenvat credit deemed legally permissible following favorable precedent

CESTAT Ahmedabad dismissed revenue's appeal regarding respondent's suo motu re-credit of cenvat credit on outward transportation. The respondent had initially reversed the credit during proceedings, but later reclaimed it following favorable Tribunal precedent in Welspun Gujarat Stahl Rohren Ltd. The Tribunal held that suo motu re-credit was legally permissible as consequential relief from the favorable decision, citing Vardhman Acrylics Limited precedent. The respondent's action was deemed compliant with Tribunal orders and legally justified.

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Issues Involved:
1. Entitlement of the respondent to take suo motu re-credit of Cenvat credit.
2. Validity of the Revenue's appeal before the Supreme Court against the Tribunal's order.

Summary:

Entitlement to Suo Motu Re-Credit:
The respondent availed Cenvat credit on outward transportation, which was initially disputed by the department via show cause notices dated 27.11.2007 and 15.06.2007. The adjudication orders dated 21.02.2006 and 30.09.2008 denied the Cenvat credit. The respondent appealed to the Tribunal, which allowed the credit on 19.03.2012. The Revenue's subsequent appeal to the Supreme Court was dismissed on 17.01.2018, finalizing the respondent's eligibility for the Cenvat credit on outward transportation.

In a related proceeding, the respondent took suo motu re-credit of Rs. 59,35,233/- after the Tribunal's favorable decision. The department issued a show cause notice on 10.04.2013 to disallow this re-credit. The Commissioner (Appeals) dropped the proceedings in the impugned order dated 15.10.2013. The Revenue appealed, arguing that the respondent was not entitled to take suo motu re-credit and that the matter was pending before the Supreme Court.

Validity of Revenue's Appeal:
The Tribunal noted that since the Supreme Court dismissed the Revenue's appeal, the challenge to the Tribunal's order allowing Cenvat credit on outward transportation was unsustainable. Regarding the suo motu re-credit, the Tribunal found that the respondent was legally entitled to re-credit as a consequential relief from the Tribunal's order. The Tribunal cited several judgments supporting the respondent's position, including C.C.E, Surat-II vs. Vardhman Acrylics Ltd, Shyam Textiles Mills vs. UOI, and Ratnamani Metals & Tubes Ltd vs. CCE & ST.

The Tribunal concluded that there was no legal error in the respondent's action of taking suo motu re-credit, as it complied with the Tribunal's order. The Revenue's appeal was dismissed, affirming the legality of the respondent's re-credit action.

Conclusion:
The Tribunal upheld the respondent's right to take suo motu re-credit of Cenvat credit following a favorable appellate decision and dismissed the Revenue's appeal, confirming the correctness of the re-credit action. The Tribunal's decision aligns with established legal precedents and judgments from higher courts.

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