2009 (8) TMI 1044 - AT - Central Excise

Refund claim - suo moto availment of CENVAT credit - structural items such as angles channels plates rods etc. - duty paying invoices - whether the appellant is eligible to take credit of the amounts reversed by him during the pendency of the decision? - Held that - Credit of the amounts deposited on issuance of Show Cause notices has been taken by the appellants after the conclusion of the proceedings in their favour by an OIO dated 28-9-06. This action of the appellant in taking credit after conclusion of the proceedings is squarely covered by the decision of the Hon ble High Court of Gujarat in their favor in the case of Shyam Textile Mills Versus Union of India 2004 (6) TMI 590 - GUJARAT HIGH COURT where it was held allowance of credit is upheld - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Eligibility to take Cenvat credit on goods considered as capital goods.
2. Legality of suo motu re-credit of reversed Cenvat credit.
3. Imposition of interest and penalties on the appellant.

Detailed Analysis:

1. Eligibility to Take Cenvat Credit on Goods Considered as Capital Goods:
The appellants, manufacturers of clinker and cement, availed Cenvat credit on goods under Chapters 72 & 73 of the Central Excise Tariff Act, 1985, as capital goods. Initially, this credit was reversed under protest due to disputes raised by the lower authorities. The Joint Commissioner, Central Excise, Tirupati, in Order-in-Original No. 14/2006, settled the dispute in favor of the appellants, confirming their eligibility to take Cenvat credit on these goods. The department did not challenge this order, making it final and binding. The Tribunal recognized that the lower authorities had issued show cause notices questioning the eligibility, but these proceedings culminated in the appellants' favor, confirming their entitlement to the credit.

2. Legality of Suo Motu Re-Credit of Reversed Cenvat Credit:
The core issue was whether the appellants could take suo motu re-credit of the amounts reversed during the pendency of the proceedings. The lower authorities contended that the appellants should have filed a refund claim under Section 11 of the Central Excise Act, 1944, rather than taking suo motu credit. However, the Tribunal found that the appellants had taken the credit based on a favorable Order-in-Original dated 28-9-06, which the department did not appeal. The Tribunal referred to the Gujarat High Court's decision in Shyam Textile Mills, which supported the appellants' action of utilizing the credit after succeeding in the appeal. The Tribunal distinguished this case from the Larger Bench decision in BDH Industries Ltd., noting that the facts differed as the latter involved duty payment rather than credit reversal.

3. Imposition of Interest and Penalties on the Appellant:
The lower authorities imposed recovery of Cenvat credit, interest, and penalties on the appellants for allegedly irregularly availing and utilizing the credit. The Tribunal, however, found that the appellants' action of taking credit post the favorable order was justified and covered by the Gujarat High Court's decision. Consequently, the Tribunal held that the impugned order imposing recovery, interest, and penalties was incorrect and unsustainable.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellants. The decision reaffirmed the appellants' right to take Cenvat credit on the goods considered as capital goods and validated their action of taking suo motu re-credit following the favorable adjudication. The Tribunal emphasized the finality of the unchallenged Order-in-Original and the applicability of the Gujarat High Court's ruling in Shyam Textile Mills to the case at hand.

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