2014 (3) TMI 316 - HC - Central Excise

Suo motu correction of the credit entry resulting into double payment of duty - Respondent corrected the same by making necessary entry in the closing balance of Cenvat credit in the Cenvat Register - Held that - In so far as the finding of the Tribunal that basic excise duty of ₹ 3.58 lacs was already paid by the respondent earlier and it was repaid while depositing the differential VAT duty was concerned, the Department has not raised any serious objection either in this tax appeal or before us through oral submissions. We therefore proceed on such basis. That being the situation, all that the respondent did was to correct the arithmetical error by making necessary entries in the register even before filing the form at the end of the month before the Excise Authorities. In the present case, when we find that there was nothing to be adjudicated upon, the mistaken double payment of excise duty made and when the amount is also not very large, we would not like to interfere with the judgment of the Tribunal keeping the larger question of suo motu claim of refund open. In the case of Visakhapatnam Steel Plant v. Commissioner of C.Ex., 2002 (3) TMI 169 - CEGAT, BANGALORE , Bangalore Bench of the Tribunal was of the opinion that correction of errors and omissions in the entries would not require permission of the Department. - Decided against Revenue.

Summary

Issues:
1. Whether the provision under the Central Excise Act and Rules allow suo motu taking of credit in absence of any specific executive order by the appropriate authority?
2. Whether all types of Refunds have to be filed under section 11B of the Central Act, 1944 and no suo motu refund/credit of duty can be taken unless and until assessee satisfy that the incidence of duty has not been passed on to third party?
3. Whether refund has to pass through the Doctrine of unjust enrichment, even if it is not so expressly provided for in the statutes?

Analysis:

Issue 1:
The respondent-manufacturer had paid basic excise duty for 30 different invoices but erroneously included an amount already paid. The respondent corrected this mistake by adjusting the entry before filing RG 23 form. The Department objected to this correction, claiming it required a refund application. The Tribunal found the correction to be a clerical mistake, not necessitating a refund application. The Court upheld this view, emphasizing the correction was an arithmetical error authorized to be rectified without a refund application.

Issue 2:
The Department argued that all refunds must be filed under section 11B of the Central Excise Act, citing a Tribunal decision. The Court acknowledged this argument but focused on the peculiar facts of the case. The respondent had mistakenly overpaid excise duty, promptly rectifying the error before the month-end. The Court agreed with the Tribunal's view that this was a mere arithmetical error, not requiring a formal refund application due to the swift correction made by the respondent.

Issue 3:
The Court noted the Department did not raise serious objections to the Tribunal's finding that the excise duty had already been paid and was repaid while depositing the differential VAT duty. The Court emphasized that the respondent's correction of the error through necessary entries in the register was valid. Referring to a prior Tribunal decision, the Court highlighted that corrections of errors and omissions do not always need permission from the Department. Ultimately, the Court dismissed the Tax Appeal, upholding the Tribunal's decision regarding the correction of the arithmetical error without the need for a formal refund application.