2011 (10) TMI 428 - AT - Central Excise

Differential duty paid wrongly - no refund claim filed - credit taken suo-mottu - show cause issued - Held That - In view of Mafatlal Industries (1996 - TMI - 44411 - SUPREME COURT OF INDIA), refund claim to pass through unjust enrichment in BDH Industries (2008 - TMI - 30889 - CESTAT MUMBAI), suo-mottu credit of cenvat is ineligible.

Summary

Issues:
Appeal against order-in-appeal regarding differential duty liability and re-credit of wrongly paid amount.

Analysis:
1. Differential Duty Liability: The appellant, a manufacturer of excisable goods, paid additional duty based on wrong advice from excise officers. Later, realizing the error, they sought re-credit of the amount. The department issued a show-cause notice for recovery under Section 11A of the Central Excise Act, which was dropped by the Additional Commissioner. The Commissioner (Appeals) set aside this decision, citing the need for departmental sanction for any correction in accounts.

2. Re-Credit Issue: The appellant argued that they were entitled to re-credit without filing a refund claim, relying on Tribunal judgments and a Bombay High Court case. The department contended that suo motu re-credit without proper officer sanction was impermissible, citing the BDH Industries Ltd. case. The Tribunal emphasized the need for following Section 11B procedures for refunds and rejected the appellant's claim of taking suo motu credit after a significant delay. The Tribunal upheld the Commissioner's decision, dismissing the appeal.

3. Legal Precedents: The Tribunal referenced the BDH Industries Ltd. case, emphasizing the requirement for proper officer sanction for credit or refund. The Mafatlal Industries case underscored the need for refund claims to pass the unjust enrichment test under Section 11B. The Tribunal differentiated the CEAT Ltd. case cited by the appellant, highlighting the unique circumstances that favored refund eligibility in that case, which were absent in the current appeal.

4. Decision: The Tribunal concluded that the appellant's action of taking suo motu credit without proper officer sanction was not permissible. Single Member Bench decisions cited by the appellant were deemed inapplicable due to the contrary ruling by the Larger Bench. The Tribunal dismissed the appeal, upholding the Commissioner's decision and emphasizing the need to adhere to statutory refund procedures under Section 11B for any duty refund claims.

This detailed analysis highlights the key issues of differential duty liability and re-credit, the legal arguments presented by both parties, relevant legal precedents, and the Tribunal's decision based on statutory provisions and established case law.