On success of the appeal of the appellant, Whether the appellant could take suo moto credit of pre-deposit?

PJ/Case Laws/2012-13/1245

Case:-M/S SHARDA FORGING AND STAMPING P LTD V/S COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD

Citation: - 2012-TIOL-1216-CESTAT-DEL

Brief Facts: - The appellants are engaged in the manufacture of iron and steel articles. The dispute arose about availment of credit of Rs. 74918/- in respect of inputs purchased by the appellant in the month of June, 1999. Proceedings were initiated against the appellant resulting in denial of credit of the said amount as also for confirmation of demand of duty of Rs. 45388/- and 16153/- , which was paid by utilizing the said unavailable Modvat credit. However the matter reached the Tribunal and vide Final order dated 28/11/2005, the dispute was decided in favour of the appellant. As a result the appellant became entitled to the credit of Rs. 74918/-, which was debited by them after confirmation of demand by the lower authorities. Accordingly, the appellant after writing a letter dated 27/12/06 to their jurisdictional Assistant Commissioner, Central Excise re-credited the said amount in their RG-23A, Part-II account on 30.12.06.
Though the lower authorities have observed that the appellant applied for re-credit of the above amount vide their letter dated 27/12/06 but they did not wait for necessary sanction/approval of the Assistant Commissioner and took the credit suo – moto. By relying upon the Larger Bench decision in the case of BDH industries Ltd. reported in 2008 (229) ELT 364 (Tri.) = (2008-TIOL- 1211-CESTAT-MUM-LB), its stand held that the appellants are not entitled to the re-credit of the said amount. If that be so, they were directed to deposit the duty of Rs. 45388/- and Rs. 16153/- by way of cash in as much as the same was paid by utilizing the said credit. Penalty of Rs. 20000/- was also imposed upon them. Hence the appellants filed this appeal.

Reasoning of Judgment: - The Hon’ble CESTAT held that the dispute about the original availment of the Cenvat credit stands decided in favour of the appellant by the earlier decision of the Tribunal. The lower authorities have relied upon the Larger Bench decision in the case of BDH Industries. The said decision was considered by the Tribunal in the case of Ultra Tech Cement Ltd. reported in 2010 (261) ELT 696 (Tri.)= (2009-TIOL-2101-CESTAT-BANG) and it was observed that the same is not applicable to identical facts and circumstances in as much as the facts of the case before Larger Bench were different. Gujarat High Court’s judgment in case of Shyam Textile Mills reported in 2005(67) RLT 488 (Guj.) held that appellant could take suo - moto re-credit after the success of their appeal. To the similar effect is Tribunal’s decision in the case of Ceat Ltd. reported in 2010(254) ELT 349 (Tri.) and it was observed that the assessee becomes automatically entitled to credit utilized for payment of duty on realising that such utilization was incorrect and when the duty was subsequently paid through PLA. In case of Bock India P. Ltd. reported in 2009 (241) ELT 251 (Tri.), it was held that an assessee is within his rights to take suo-moto credit of the amount, on receipt of favorable decision in appeal, under intimation to the Revenue. In the said order, the Tribunal held that there is no dispute about the refund of the pre-deposit of Rs. 40000/-. The only objection raised by the Revenue is that the appellant, instead of taking the refund suo moto, should have approached them. Such refund of pre-deposit accrued to the appellant immediately on passing of the Tribunal’s order allowing their appeal. Such credit was also availed by the appellant, under intimation to the revenue. It is again well settled that the provisions of unjust enrichment or limitation do not apply to such refund of pre-deposited amount. As rightly contended by the appellant, Larger Bench decision in the case of M/s BDH Industries Ltd. [2008 (229) ELT 364 (Tri.-LB)]=(2008-TIOL-1211-CESTAT-MUM-LB) would not strictly apply to the facts of the case in as much as the issue of refund of pre-deposit, on success of appeal, was not the issue under consideration before the Larger Bench. Hence there is no justification in confirming said amount. The impugned orders cannot be upheld. The same were accordingly set aside and the appellant’s appeal was allowed with consequential refund.
They held that there is no dispute about the refund of the amount in issue and appellant had already intimated the Revenue, no reasons to deny the re-credit to the appellant. It is also seen that the appellant filed an application before Asstt. Commissioner which does not stand decided by him even till date. As such to deny the credit to the assessee on the ground that he should have awaited the decision of the Asstt. Commissioner which incidentally does not stand passed by him till date, is neither justified nor fair.

Decision: - Appeal allowed with consequential refund.

Comment:- this is very good decision wherein it is held that the manufacturer had already intimated to the department but the department has not taken any action on this letter. Hence the manufacturer can take the credit of the same. Logically also, it seems right that when the appeal is allowed by higher appellate authority then there should not be requirement for permission from the lower authority.

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PJ/Case Laws/2012-13/1245

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