2017 (1) TMI 1534 - AT - Central Excise

Re-credit of duty paid twice - Rule 8(3)(a) of the Central Excise Rules, 2002 - Held that - on payment of duty in cash which had been paid in CENVAT credit earlier, the appellant would be entitled to take recredit - it is an admitted fact that the appellant had paid the duty twice, once through Cenvat credit and again in cash and once duty has been paid in cash along with interest, appellant is well within his right to take recredit of the same - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Delay in payment of excise duty
- Utilization of Cenvat credit
- Rejection of refund claim
- Interpretation of Rule 8 of Central Excise Rules
- Application of Section 11B of Central Excise Act

Delay in Payment of Excise Duty:
The case involved manufacturers of excisable goods who defaulted in paying duty for January and February 2010, paying it only on 7-4-2010, more than 30 days late. The appellant continued to use Cenvat credit during March and April 2010, contrary to Rule 8(3)(a) of the Central Excise Rules, 2002, which requires payment without utilizing Cenvat credit if duty is not paid within 30 days.

Utilization of Cenvat Credit:
The appellant utilized Cenvat credit for duty payment during March and April 2010, totaling ?16,27,567, which was rectified by paying the duty in cash on 17-8-2010. Subsequently, a refund claim was filed on 3-5-2012, which was rejected as time-barred under Section 11B of the Central Excise Act, 1944.

Rejection of Refund Claim:
The original authority and the Commissioner (Appeals) rejected the refund claim, leading to the present appeal. The appellant argued that once duty is paid in cash, they are entitled to recredit the amount in their Cenvat account, emphasizing that the payment in cash entitles them to take recredit of ?16,27,567.

Interpretation of Rule 8 of Central Excise Rules:
The appellant contended that contravention of Rule 8 does not warrant a refund claim under Section 11B, as taking recredit after paying in cash does not constitute a refund but a book adjustment. Citing a precedent, the appellant argued that recredit should be allowed upon cash payment of duty previously paid through Cenvat credit.

Application of Section 11B of Central Excise Act:
The Tribunal held that the impugned order was unsustainable as the appellant had paid duty twice, once through Cenvat credit and later in cash. Upon payment in cash, the appellant was entitled to recredit the amount, leading to the appeal being allowed, setting aside the impugned order and permitting recredit of the duty paid through Cenvat credit.

The judgment, delivered by Shri S.S. Garg, Member (J), on 23-1-2017, highlights the importance of adhering to excise duty payment timelines, the correct utilization of Cenvat credit, and the entitlement to recredit amounts paid in cash after initial Cenvat credit usage.