2007 (5) TMI 387 - AT - Central Excise

Summary

Issues involved: Appeal against Commissioner (Appeals) order for recovery of Modvat credit wrongly taken and imposition of penalty.

Summary:
The appeal was made against the Commissioner (Appeals) order dated 19-1-2006, which directed the recovery of unauthorized credit taken by the assessee and imposed a penalty of Rs. 5000 under Rule 57-I read with Rule 173Q(1) of Central Excise Rules, 1944. The appellant had taken credit in RG-23A without proper authorization following a favorable order from the Commissioner (Appeals) dated 22-5-1999. The original authority had confirmed a duty demand of Rs. 91,609, which the company paid on 19-9-97. The appellant claimed that they were eligible for a refund in accordance with the Commissioner (Appeals) order and hence the recovery of credit was not legal. The Department, however, supported the findings of the Commissioner (Appeals).

Upon careful consideration of the submissions and records, it was noted that the duty amount paid by the appellant was confirmed by the original authority and was not due to any pre-deposit order by the Commissioner (Appeals). The appellant's unilateral decision to take credit in RG-23A without proper authorization was deemed unauthorized. The concept of self-assessment and self-payment did not entitle the appellant to take a suo motu refund of any alleged sum due from the Department. Such actions were considered objectionable and not permitted by law. The order of the Commissioner (Appeals) directing the recovery of the unauthorized credit taken was deemed justified, and the imposition of a penalty was upheld.

The judgment emphasized that if a refund was due as per the Commissioner (Appeals) order, the appellant should have sought the refund through proper channels for consideration and sanction as per the law. Taking a self-refund without proper authorization was not in accordance with legal procedures. The decision of the Commissioner (Appeals) to recover the unauthorized credit and impose a penalty was upheld, while the eligibility for a refund was left for the competent authority to consider as per the law. Ultimately, the appeal was rejected, and the judgment was pronounced in open court on 29-5-2007.