2011 (9) TMI 685 - AT - Central Excise

Refund - As no refund was granted to the appellant in terms of the aforesaid order, the appellant took suo motu credit of Rs. 2,29,646/- in their PLA account vide entry No. 1, dated 25-4-2007 and utilized the said amount for payment of duty on excisable goods manufactured and cleared by them, during the month of May, 2007 - Tribunal in the case of BDH Industries (2008 -TMI - 30889 - CESTAT MUMBAI) have held that there is no provision under the Central Excise Act, 1944 and the Rules allowing suo motu taking of credit or refund without sanction by the proper officer and, therefore, the findings of the appellate authority in the impugned order upholding the recovery of the suo motu refund taken is correct in law and has to be sustained Regarding penalty - there was no suppression or wilful misstatement of facts on the part of the appellant to evade any duty or claim any ineligible refund. It is a fact that the appellant was eligible for refund in terms of the order-in-appeal dated 30-3-2007, which the department did not grant - There is no mala fide on the part of the appellant and, therefore, imposition of equivalent amount of penalty under Section 11AC read with Rule 25 of tine Central Excise Rules, 2002 is not warranted and, accordingly, I set aside the penalty imposed on the appellant by the lower appellate authority - Decided against the assessee

Summary

Issues:
1. Grant of adjournments in the case.
2. Refund claim of excess interest on delayed payment of duty.
3. Legality of taking suo motu credit of refund.
4. Imposition of penalty on the appellant.

Analysis:
1. The judgment addresses the issue of multiple adjournments sought by the appellant during the hearing. Despite several adjournments granted earlier, the appellant requested another adjournment on the grounds of sickness of the person handling tax matters. Citing Section 35C(1A) of the Central Excise Act, the judge refused further adjournment, emphasizing that sufficient opportunities had already been given, and proceeded with the appeal based on the submissions made in the appeal memorandum.

2. The case involved a refund claim by the appellant for excess interest paid on delayed payment of duty. The appellant, a manufacturer of excisable goods, claimed a refund of Rs. 2,29,649, stating they had paid interest at a higher rate than prescribed. The jurisdictional Deputy Commissioner rejected the claim, leading to an appeal before the Commissioner (Appeals) who allowed the appeal. However, the appellant took suo motu credit of the refund amount without waiting for a separate application, which led to a demand notice for duty payment, interest, and penalty.

3. The legality of taking suo motu credit of the refund without proper sanction was a key issue. The judge referred to the Tribunal's decision in BDH Industries Ltd. case, highlighting that no provision allowed such action under the Central Excise Act. The judge upheld the lower appellate authority's decision regarding the recovery of the suo motu refund and the imposition of interest under Section 11AB.

4. The final issue addressed was the imposition of penalty on the appellant. Despite taking suo motu credit, there was no evidence of suppression or wilful misstatement by the appellant. The judge noted that the appellant was eligible for the refund as per the appellate order, and the department should have granted it suo motu. Consequently, the penalty imposed by the lower appellate authority was set aside, and the appellant was directed to be refunded the amount without the need for a separate application, along with interest as per Section 11BB of the Central Excise Act.

In conclusion, the judgment dealt with adjournment requests, refund claims, legality of suo motu credit, and penalty imposition, providing a detailed analysis of each issue and ultimately modifying the lower appellate authority's decision in favor of the appellant.