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2013 (3) TMI 602 - AT - Central ExciseReversal of MODVAT Credit - Duty paid under protest - Suo moto availment of CENVAT Credit - Difference of opinion - Majority order - Held that - while availing Cenvat credit suo motu by the appellant there was no permission or no concurrence obtained from the lower authorities by the appellant. In the absence of any such concurrence any credit raised in the Cenvat register in my view is improper due to the decision of Larger Bench of the Tribunal in the case of BDH Industries Limited (2008 (7) TMI 78 - CESTAT MUMBAI). - appellant herein has erred in taking suo motu credit on his own - Decided against assessee.
Issues Involved:
1. Whether the impugned order has traveled beyond the scope of the show cause notice. 2. Whether the reversal of debit entry was only an accounting entry that would not require duty paying documents. 3. Whether the amendment of licences from VABAL to QABAL should be given retrospective effect. 4. Whether the reversal of credit by the appellant can be considered in terms of the amnesty scheme. 5. Whether the demand can be set aside on the grounds that the proper course of action was to deny the benefit of Notification No. 203/92. 6. Whether the appellants made false claims regarding conversion of licences and fulfillment of export obligations. Issue-wise Detailed Analysis: 1. Scope of Show Cause Notice: The appellant argued that the impugned order was based on grounds not mentioned in the show cause notice, specifically a letter from the Joint Director of Foreign Trade, which was not relied upon in the notice. The Tribunal noted that the show cause notice proposed to deny credit on the ground that it was taken without valid duty-paying documents. However, the lower authorities' orders were based on the prospective effect of the conversion of licences, which was not part of the original notice. The Tribunal agreed that the order had indeed traveled beyond the scope of the show cause notice. 2. Accounting Entry and Duty Paying Documents: The appellant contended that the reversal of debit entry was merely an accounting entry and did not require duty-paying documents. The Tribunal referred to the Larger Bench decision in BDH Industries Ltd., which held that all types of refunds must be filed under the Central Excise Act and Rules, and no suo motu credit of duty paid in excess may be taken by the assessee. Therefore, the Tribunal concluded that the appellant's re-credit without proper documentation was not permissible. 3. Retrospective Effect of Licence Amendment: The appellant argued that the conversion of VABAL to QABAL should be considered retrospective. The Tribunal referred to the Larger Bench decision in Bhilwara Spinners, which held that amendments by the DGFT cannot have retrospective effect. The Tribunal found that the conversion of licences was prospective, and thus, the appellant was not entitled to the credit for the period before the conversion. 4. Reversal of Credit and Amnesty Scheme: The appellant claimed that the reversal of credit was not under the amnesty scheme, as the scheme was introduced in 1997, and the reversal occurred in 1995. The Tribunal noted that the reversal was made under protest and pending conversion of licences, not under the amnesty scheme. Thus, the Tribunal agreed with the appellant that the reversal was not in terms of the amnesty scheme. 5. Denial of Notification No. 203/92 Benefit: The appellant argued that if the credit was not permissible, the proper course of action was to deny the benefit of Notification No. 203/92, rather than reversing the credit. The Tribunal, however, noted that the issue had already been settled by various decisions, which held that the benefit of the notification could be denied if the conditions were not fulfilled, but the credit could not be reversed. Thus, the Tribunal found the impugned order unsustainable on this ground as well. 6. False Claims Regarding Licences: The Tribunal examined whether the appellant made false claims about the conversion of licences and fulfillment of export obligations. It was found that the appellant had indeed made claims that were not entirely accurate, as not all licences were converted by the time they claimed re-credit. However, this issue became secondary given the findings on the primary issues. Conclusion: The appeal was ultimately dismissed based on the majority decision, holding that the appellant had erred in taking suo motu credit without proper authorization, and the impugned order was upheld. The Tribunal emphasized that all types of refunds must be filed under the Central Excise Act and Rules, and no suo motu credit of duty paid in excess may be taken by the assessee.
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