TaxTMI 
TaxTMI 
2026 (7) TMI 1935
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....he appellant is in appeal against the impugned Order-in-Original dated 16.05.2018 passed by the Commissioner of C.G.S.T. and Central Excise, Siliguri, whereby the demand of Central Excise duty amounting to Rs. 3,41,15,506/-, together with applicable interest and equivalent penalty under Section 11AC of the Central Excise Act, 1944, came to be confirmed against them, on the allegation that it had irregularly availed suo motu re-credit of the annual differential refund for the financial years 201112 to 2013-14 without obtaining refund orders from the jurisdictional Assistant Commissioner/Deputy Commissioner, allegedly in contravention of the procedure prescribed under Paragraph 4 of Notification No. 20/2007-CE dated 25.04.2007, as amended by Notification No. 38/2008-CE dated 10.06.2008. 3. The facts of the case are that the appellant is engaged in the manufacture of medicaments falling under Chapter 30 of the Central Excise Tariff Act, 1985 and was admittedly availing the benefit of the Area-based exemption under the Central Excise Notification No. 20/2007-CE dated 25.04.2007, as amended, in respect of dutiable goods manufactured and cleared by them. In terms of Paragraph 2D there....
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....014 5 Disclosure of self-credit in the monthly refund claim filed by Appellant August 2012 June 2013 June 2014 6. Subsequently, a CERA Audit was conducted by the Department and an audit objection report dated 31.03.2015 was conveyed to the appellant seeking clarification on the differential amounts of suo-motu credit availed by the appellant in its PLA account without following the refund procedure. The appellant submitted its reply dated 19.05.2015 explaining the basis of such availment. 7. Thereafter, a Show Cause Notice dated 08.09.2016 came to be issued proposing recovery of the entire amount of Rs. 3,41,15,506/-, together with interest and equivalent penalty, by invoking the extended period of limitation, principally on the ground that the appellant had taken self-credit of the annual differential refund without following the refund procedure contemplated under Paragraph 4 of the notification. 7.1. The appellant contested the allegations by filing a detailed reply dated 06.04.2017. 7.2. The matter was adjudicated vide the impugned Order-in-Original dated 16.05.2018, wherein the ld. adjudicating authority confirmed the proposals raised in the above No....
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....und has been prescribed under Para 4 of the said notification and the same has to be granted by the Department suo-motu relying upon the monthly duty payment statements submitted by the assessees. (v) However, in the instant case, the department did not adhere to such legislative mandate and did not take any steps for granting the differential annual refund to the Appellant suo motu. Further, even after the application by the Appellant in each of the years, the Department did not take any action. (vi) Thereafter, when the Appellant took the credit suo motu after the mandated period of refund under the Notification expired (viz. 15th May of the subsequent year), the department has arbitrarily sought to recover the eligible differential refund claimed on the ground that the Appellant should have continued to wait for the department to sanction the refund. (vii) Thus, it is pertinent to note that there is no dispute in the instant case regarding the eligibility or the computation of the differential refund. The department never raised any objection regarding the eligibility of refund or computation submitted by the Appellant. It is pertinent to note that eve....
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.... cannot be invoked. Thus, the entire demand is barred by limitation. (i) The entire demand has been confirmed pursuant to SCN issued on 08.09.2016 for the period 2011-12 to 2013-14 invoking the provisions of Section 11A(4)(e) of the Central Excise Act, 1944 ('CEA'), viz. extended period of limitation. (ii) The Appellant submits that the extended period is not invocable in the present case as there was no contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty on the part of the Appellant. (iii) As evident from the table reproduced in the facts, the department was aware of the selfcredit of differential annual refund availed by the Appellant vide the following communications/ documents: * Applications filed by Appellant on 07.05.2012 (for FY 2011-12), 15.05.2013 (for FY 2012-13) and 29.04.2014 (for FY 2013-14) for refund; * Monthly duty payment statements filed for the months of August 2012, June 2013 and June 2014 where the factum of availment of self-credit of the annual differential refund was reflected in the computation chart. * The suo motu credit has been avai....
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.... issuance of SCN on 08.09.2016 by invoking the extended period of limitation is grossly erroneous. (viii) Reliance in this regard is placed on the following decisions wherein various Courts held that if the activities of the assessee were already in the knowledge of the department, then no SCN can be issued invoking the extending period of limitation: * M/s. Super Forgings & Steel Limited v. Commr. of Central Excise, Kolkata - IV - 2024 (1) TMI 448 - CESTAT Kolkata. * Orissa Bridge & Construction Corpn. Ltd. v. CCE, Bhubaneshwar, 2011 (264) ELT 14 (SC) (ix) In view of the aforesaid submissions, the extended period of limitation is not invokable in the present case. C. When demand itself is not sustainable, no interest is payable, and no penalty is imposable. (i) Where the principal demand itself is not payable, the demand for interest and penalty ought to be set aside. (ii) Even otherwise, in the absence of any suppression or mala fide intent, when the department was aware of the facts all along, the question of imposition of penalty does not arise. 8.1. In view of the above submissions, the Ld. Counsel for the appel....