Whether suo moto credit of duty mistakenly paid twice can be taken?

PJ/CASE LAW/2015-16/2818

Case:-PUSHP ENTERPRISES VersusCOMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

Citation:- 2015 (322) E.L.T. 728 (Tri. - Del.)

Brief facts:- The appellant is in appeal against the impugned order wherein Cenvat credit takensuo moto by the appellant was denied. Therefore, duty is demanded along with interest and penalty of Rs. 50,000/- was also imposed.
The facts of the case are that the appellant is manufacturer of bearing component and supplying the same to M/s. SKF Ltd. They are having an agreement as the actual selling price of the goods were not known, therefore they were issued supplementary invoice. If the cost of raw material is increased, the appellant cleared the goods on payment of duty. Later on, they realized that the cost of raw material is increased. Therefore, they raised 3 supplementary invoice on 3-11-2008 and debited the duty thereon in their Cenvat credit account. The buyer of the goods did not accept the invoice issued by the appellant on the premise that as per the agreement the buyer has already paid excess duty to the appellant. In this scenario, the appellant took suo motu credit on the duty paid on supplementary invoice on 21-3-2009. During the course of audit, it was found that appellant has taken suo moto Cenvat credit in their Cenvat credit account which they were not entitled to as per Section 11B of the Central Excise Act, 1944. A show cause notice was issued to the appellant to deny Cenvat credit taken suo moto and consequently to demand duty along with interest and for imposition of penalty. The matter was adjudicated and demand along with interest was confirmed and penalty of Rs.50,000/- was also imposed. On appeal, the order of adjudication was confirmed by the first appellate authority. Against the said order appellant is before tribunal.

Appellant’s contention:- Learned Counsel submits that it is admitted fact that they have paid the duty twice and the supplementary invoice issued by the appellant were not accepted by the buyers. Therefore, they had taken suo moto credit. She submits that although there is no provision to take suo moto credit under Section 11B of the Act, it is only a procedural lapse and for that Cenvat credit cannot be denied as held by this Tribunal in the case of Sopariwala Exports Pvt. Ltd. [2013 (291)E.L.T.70 (Tri- Ahmd.)] and S Subrahmanyan and Co. [2011 (268)E.L.T.497 (Tri-Ahmd)]. She also relied on the decision of Zandu Chemicals Ltd.v. Union of India[2015 (315)E.L.T.520 (Bom)] to say that for procedural requirement provisions are incapable of supplementary invoice and there is no requirement for strict compliance therewith if there is material on record which show procedural requirement is furnished, then inconsistency of compliance with procedure prescribed as per law is totally uncalled for and unjustified.

Respondent’s contention:-On the other hand, learned AR opposed the contention of the learned Counsel and submits that Larger Bench of this Tribunal in the case of BDH Industries [2008 (229)E.L.T.364 (Tri-LB)held that suo motu credit or refund is not allowed. Although the said order has been challenged before the Hon’ble High Court of Bombay, but fate of the same is not known. He further relied on the decision of Titwari Sugar Complex [2009 (247)E.L.T.519 (Tri-Del)] to deny the Cenvat credit. Learned AR also submits that once the amount is deposited with the Government of India, same cannot be taken as suo motu credit.

Reasoning of judgment:- In this case, the short issue to be decided by them is that whether the appellant have correctly taken suo moto credit of duty paid twice or not. For that, the learned AR has relied on the decision of the Larger Bench of this Tribunal in the case of BDH Industries (supra) which was followed by this Tribunal in the case of Titawi Sugar Complex (supra).
On the other hand, learned Counsel has relied on the decisions of Sopariwala Exports Pvt. Ltd. (supra) wherein on the similar facts, this Tribunal had came to the conclusion that decision of Motorola India Pvt. Ltd. [2006 (206)E.L.T.90 (Kar)]was not placed before the Larger Bench of this Tribunal in the case of BDH Industries Ltd. (supra), therefore the decision of BDH Industries Ltd.(supra) cannot be relied upon and thereafter this Tribunal following the decision of Motorola India Pvt. Ltd. (supra) came to the conclusion that suo moto credit can be taken if duty is paid twice as excess duty paid is not a duty and same is deposited. In these circumstances, as the decision of Sopariwala Exports Pvt. Ltd. (supra) has been delivered by this Tribunal based upon the decision of Hon’ble High Court of Karnataka in the case of Motorola India Pvt. Ltd., therefore, they hold that the appellant has correctly taken suo moto credit of the duty paid twice. In these circumstances, impugned order is set aside. Appeal is allowed with consequential relief, if any.

Decision:- Appeal allowed.

Comment:-The substance of the case is that relying in the case of Motorola India Pvt. Ltd, it was held that though there is no provision to take suo motu credit under Section 11B of Central Excise Act 1944, manufacturer is eligible for taking suo motu Cenvat credit on excess amount paid by him because the amount paid twice cannot be considered as duty and rather it is deposit.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2818

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