2014 (2) TMI 405 - AT - Central Excise

Re-Credit of CENVAT Credit previously debited - suo moto after withdrawal of refund claim - Imposition of penalty under Rule 15 of CENVAT Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1944 - Held that - Once the refund claim is withdrawn, the assessee is entitled for credit of CENVAT which was debited as a condition to such refund claim. This being not a case of refund of excess paid excise duty, no reason to doubt that the assesee has not been enriched unjustifiably. This is a case of availment of CENVAT credit legitimately eligible to the appellant in terms of CENVAT credit Rules, 2004. The revenue has not alleged or anything on record that the CENVAT credit in question was wrongly taken contrary to the provision such as non receipts of the input, documents are fake, duty payment on input is in dispute, input not used in the manufacture etc. So long such disputes do not exist, the CENVAT credit availed is as per the provision of CENVAT Credit Rules, 2004 and therefore neither said CENVAT credit can be disallowed nor provision of unjust enrichment is applicable in the present case - Decided in favour of assessee.

Summary

Issues:
Demand against appellant being a 100% EOU, availing credit without proper documents, disallowance and recovery of credit, imposition of penalty, applicability of unjust enrichment, entitlement for re-credit of CENVAT, legitimacy of CENVAT credit availed, distinguishing previous judgments relied upon by revenue.

Analysis:
The appeal was filed against an Order-in-Appeal where the demand was made on the grounds that the appellant, a 100% EOU, availed credit without proper documents. The appellant had applied for a refund of terminal excise duty, debiting the CENVAT amount, and later availed suo moto credit of the same amount. A show cause notice was issued for disallowance and recovery of the credit, along with penalty imposition. The adjudicating authority confirmed the demand and penalty, which was upheld by the Appellate Commissioner. The Commissioner relied on previous judgments to establish the unjust enrichment principle.

The Tribunal, after hearing both sides and reviewing the records, decided to proceed with the appeal itself rather than a stay. The appellant cleared goods to KASEZ, applied for a refund of central excise duty, debiting the CENVAT credit availed on inputs. Upon withdrawing the refund claim, the appellant availed suo moto credit. The Tribunal referred to previous judgments to support the appellant's entitlement to re-credit of CENVAT in such circumstances, highlighting the legitimacy of the credit availed.

The Tribunal found the lower authorities' reliance on previous judgments to be incorrect in the context of re-crediting CENVAT previously debited by the appellant. Since the case did not involve a refund of excess paid excise duty, the unjust enrichment principle did not apply. The Tribunal emphasized that the appellant's act of availing CENVAT credit was legitimate under the CENVAT Credit Rules, as there were no disputes regarding the credit's eligibility. The Tribunal distinguished the previous judgments relied upon by the revenue, concluding that the appellant had a valid case and set aside the impugned order, allowing the appeal with any consequential relief.

In conclusion, the Tribunal held that the appellant was entitled to re-credit of CENVAT in the given circumstances, and the previous judgments cited by the revenue were not applicable. The impugned order was set aside, and the appeal was allowed with any necessary consequential relief.