Whether appellant can take suo moto credit of the Cenvat Credit once reversed?

PJ/Case Law/2014-15/2383

Case:-M/s KIRI INDUSTRIES LTD Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, VADODARA-I

Citation:-2014-TIOL-1992-CESTAT-AHM

Brief facts:-This stay application is filed by the appellant for staying the operation of OIA NO. VAD-EXCUS- 001-APP-500-13-14, dt. 18.11.2013 under which first appellate authority has upheld the OIO NO.12/DEM/JC/D-II/2013, dt. 16.05.2013 passed by the adjudicating authority. The issue involved in the present appeal is whether appellant can take suo moto credit of the Cenvat Credit once reversed and also whether Cenvat Credit with respect to services of Initial Public Offer (IPO) is admissible to the appellant.

Appellant’s contention:-Shri Dhaval K. Shah (Advocate) appearing on behalf of the appellant argued that IPO is a system of procurement of funds from the public for running the business of production and sale of final excisable goods of the appellant and the services are covered within the definition of Rule 2(l) of the Cenvat Credit Rules, 2004. He relied upon the stay order of Bangalore Bench in the case of M/s. Kernex Microsystems (I) Ltd. Vs. CCE, Hyderabad 2012 (27) STR 42 (Tri. -Bang.) = 2011-TIOL-1774-CESTAT-BANGwhere a stay on the same issue has been granted. Regarding taking of suo moto credit of admissible Cenvat Credit after once reversing he relied upon the judgment of CESTAT - Mumbai in the case of M/s. NOCIL Vs. CCE, Belapur =2014-TIOL- 203-CESTAT-MUMto support appellant's contention that Cenvat Credit reversed by the assessee can be taken as re-credit without following the provisions under Section 11B of the Central Excise Act, 1944. He also relied upon the following case laws:

(i)          ICMC Corporation Ltd., Chennai Vs. CCE, Chennai = 2014-TIOL-121-HC-MAD-CX
(ii)         Shyam Textile Mills and Anr. Vs. UOI & Ors. [2005 (67) RLT 488 (Guj.)]
(iii)        Sopariwala Exports Pvt. Ltd. Vs. CCE, Vadodara-I [2013 (291) ELT 70 (Tri. - Ahmd.)] = 2013 TIOL-1936-CESTAT-AHM
(iv)        CCE, Bangalore-III Vs. Motorola India Pvt. Ltd. [2006 (206) ELT 90 (Kar.)]
(v)         Bajaj Tempo Ltd. Vs. CCE, Pune [2004 (172) ELT 473 (Tri. - Mumbai]
(vi)        NOCIL Vs. CCE, Belapur = 2014-TIOL-203-CESTAT-MUM
(vii)      M/s. Sharda Forging & Stamping P. Ltd. Vs. CCE, Ghaziabad = 2012-TIOL-1216- CESTAT-DEL

Respondent’s contention:-Shri K.J. Kinariwala (A.R.) appearing on behalf of the revenue argued that the appellant cannot take suo moto credit and the provisions contained in Section 11B of the Central Excise Act, 1944 are required to be followed for taking any credit. Ld. A.R. therefore defended the order passed by the lower authorities.

Reasoning of judgment:-It is observed from the order passed by the Hon'ble High Court of Madras in the case of M/s. ICMC Corporation Ltd., Chennai Vs. CCE, Chennai = 2014-TIOL-121-HC-MAD-CXthat in the case of wrongly debited Cenvat Credit suo moto credit can be taken and there is no need to file the refund claim under Section 11B of the Central Excise Act, 1944. A similar view was earlier taken by the Jurisdictional High Court of Gujarat in the case of M/s. Shyam Textile Mills & Anr. Vs. UOI 2005 (67) RLT 488 (Guj.). On merits also a stay on the same issue was given by the Bangalore CESTAT in the case of M/s. Kernex Micro Systems (I) Ltd. Vs. CCE, Hyderabad (supra). Prima facie, appellant has made out a good case for waiver of the confirmed demand and penalties. The other contentions regarding duty paying documents being improper needs deeper consideration and can only be gone through at the time of final hearing.

In view of the above observations, there will be stay on recovery of the confirmed demands and penalties till the disposal of the appeal.

Decision:- Stay granted.

Comment:- The analogy of the case is by relying on the various decisions of the high court and tribunal, it was concluded that suo moto credit can be taken for wrongly debited CENVAT credit and there is no need to file refund claim under section 11B of Central Excise Act, 1944. Accordingly, stay application was allowed.

Prepared by:- Monika Tak

Comments

PJ/Case Law/2014-15/2383

Post a Comment

Query