2011 (4) TMI 1125 - AT - Central Excise

Cenvat credit Refund - appellants reversed the CENVAT credit under protest. After one year when no show-cause notice was issued and when no intimation regarding the offence committed by them, the appellants took back the amount of CENVAT credit reversed by them in the CENVAT account and intimated to the department Held that - reversal mde under protest therefore refund claim cannot be rejected on the ground of limitation, stay petition is allowed and the impugned order is set aside as far as penalty is concerned, duty demand is upheld which will be reversed with interest and the refund claim filed by the appellants will be considered favourably within one month from the date of filing of refund claim

Summary

Issues:
1. Reversal of CENVAT credit under protest without show-cause notice.
2. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.
3. Applicability of the decision in the case of BDH Industries Ltd. regarding re-credit procedure.

Analysis:
1. The appeals involved the issue of appellants reversing the CENVAT credit under protest without receiving any show-cause notice within a year. The Revenue initiated proceedings after the appellants took back the reversed credit, arguing that a refund claim should have been filed instead of taking the credit back suo motu. The Tribunal remanded the matter previously for not following principles of natural justice. The appellants contended that they were forced to reverse the credit due to the absence of a show-cause notice and cited various decisions to support their argument. However, the Tribunal held that the appellants failed to make a prima facie case, following the decision in the BDH Industries Ltd. case, which mandated re-credit through a refund claim only.

2. The imposition of penalty under Section 11AC of the Central Excise Act, 1944 was a significant issue in the case. The appellants argued that the reversal of credit was done under protest and should not be considered as duty. The Tribunal allowed the stay petition, setting aside the penalty while upholding the duty demand. It directed the appellants to reverse the credit with interest and file a refund claim, ensuring the department processes it promptly within one month.

3. The applicability of the decision in the case of BDH Industries Ltd. regarding the re-credit procedure was crucial. The appellants contended that the circumstances of their case, where the reversal was done under protest and no show-cause notice was issued, distinguished it from the BDH Industries Ltd. case. However, the Tribunal held that the reasoning for the reversal of CENVAT credit was irrelevant as per the Larger Bench decision, emphasizing that re-credit should only be taken through a refund claim. The Tribunal directed the appellants to follow this procedure for re-credit, ensuring compliance with the legal precedent set by the BDH Industries Ltd. case.