Suo moto recredit of duty impermissible under Central Excise but demand time-barred without suppression under Section 11A

CESTAT Bangalore held that appellant's suo moto recredit of duty was impermissible under Central Excise provisions, as refunds must be claimed through Section 11B of Central Excise Act 1944, citing SC precedents in Mafatlal Industries and Sahakari Khand Udyog Mandal. However, the demand was time-barred as no suppression was established - the recredit was transparently shown in appellant's cenvat credit account. Commissioner (Appeals) failed to justify invoking extended limitation period under Section 11A proviso. Since duty was paid under protest with no time limit for refund claims, suppression allegations were unsustainable. Appeal allowed, impugned order set aside.

---

---

Issues:
1. Whether the appellant can take suo moto credit instead of filing a refund claim under the Cenvat Credit Rules, 2004.
2. Whether the appellant suppressed any facts with the intention to evade payment of duty.
3. Whether the demand confirmed by the authorities is sustainable.
4. Whether the appellant's action of taking recredit without following the prescribed procedure is justified.
5. Whether the appellant is liable for interest and penalty imposed by the authorities.

Analysis:

Issue 1:
The appellant, a manufacturer of motor vehicles, was issued a show-cause notice demanding duty collected on tractors cleared under exemption. The original authority set aside the demand, but the appellant took suo moto cenvat credit instead of filing a refund claim, leading to a subsequent show-cause notice demanding the irregularly availed credit. The Commissioner (Appeals) upheld the order, stating that a refund claim under Section 11B of the Central Excise Act, 1944 was necessary. The appellant argued citing precedents, but the Revenue contended that refund must be claimed under Section 11B. The judgment emphasized that refund must be claimed through Section 11B, and the appellant should have followed the prescribed procedure instead of taking suo moto credit.

Issue 2:
The Revenue alleged suppression by the appellant, stating that the act of taking suo moto credit without informing the department amounted to suppression with the intention to avail irregular cenvat credit. However, the appellant argued that there was no suppression as the recredit was shown in their cenvat credit account. The judgment noted that the impugned order did not address suppression or invoke provisions for demanding duty beyond the normal period. It concluded that the demand beyond the normal period could not be sustained, especially since the duty was paid under protest.

Issue 3:
The authorities confirmed the demand, citing non-admissibility of suo moto credit and reliance on legal precedents. The judgment highlighted conflicting decisions that were ultimately settled by the Larger Bench, indicating that the question of suppression could not be alleged against the appellant. It further stated that since the duty was paid under protest, there was no time limit for filing a refund claim, undermining the allegation of suppression. Consequently, the impugned order was set aside, and the appeal was allowed.

Issue 4:
The case revolved around whether the appellant's action of taking recredit without following the prescribed procedure was justified. The judgment emphasized the necessity of following Section 11B for claiming refunds, rejecting the appellant's argument based on precedents. It concluded that the appellant should have filed a refund claim instead of taking suo moto credit.

Issue 5:
The authorities imposed interest and penalty on the appellant. The judgment highlighted conflicting decisions and settled precedents, ultimately setting aside the impugned order and allowing the appeal with consequential relief, if any, as per law.

This comprehensive analysis of the judgment addresses all the issues involved, providing a detailed overview of the legal arguments and conclusions reached by the Appellate Tribunal.

---