2012 (5) TMI 517 - AT - Central Excise

Waiver of Duty - Reversal of CENVAT Credit - Wrong reversal of CENVAT Credit - Suo moto reversal - Whether suo motu Cenvat credit earlier reversed can be taken without the sanction and approval of the department - Held that - no prima facie doubt left that the appellant were actually afforded opportunity of being heard but they avoided to appear on hearings dated 24.12.2010, 5.01.2011 and 14.1.2011 and kept on requesting for adjournment for cross examination/personal hearing - No case for waiver of duty demand, interest and penalty - Stay denied.

Summary

Issues involved:
- Reversal of Cenvat credit by the appellant based on jurisdictional Range Officer's instructions.
- Subsequent re-crediting of Cenvat credit by the appellant and dispute regarding the validity of this action.
- Show cause notice issued for recovery of wrongly taken Cenvat credit, interest, and penalty.
- Adjudication by Addl. Commissioner upholding denial of Cenvat credit and imposition of penalty.
- Appeal to Commissioner (Appeals) against Addl. Commissioner's order.
- Request for waiver of pre-deposit of Cenvat credit demand, interest, and penalty during the appeal process.

Analysis:
1. The appellant, engaged in manufacturing products chargeable to central excise duty, initially reversed Cenvat credit amounting to Rs.18,86,138/- based on the Range Officer's instructions. However, they later realized the reversal was a mistake and sought to re-credit the Cenvat amount. Despite informing the jurisdictional authorities and declaring the correction in their returns, a show cause notice was issued for recovery of the wrongly taken Cenvat credit, along with interest and penalty under the Cenvat Credit Rules, 2004.

2. The Addl. Commissioner, through an order-in-original, held that the appellant could not take suo moto credit that had been previously reversed, denying the credit and imposing an equal penalty. The Commissioner (Appeals) upheld this decision, leading to the current appeal and stay application.

3. The appellant's counsel argued that they were eligible for the Cenvat credit, highlighting the erroneous direction from the Range Superintendent to reverse the credit. They contended that the subsequent re-crediting was justified, as communicated to the central excise authorities and reflected in their returns. The counsel also raised concerns about the violation of natural justice in the adjudication process, emphasizing the lack of proper opportunity for defense, including the inability to cross-examine the Superintendent.

4. On the other hand, the Departmental Representative countered that the appellant's actions were incorrect based on a Tribunal decision, emphasizing the need for departmental sanction for any corrections in credit accounts. They argued that the appellant was not entitled to retake the credit that was previously reversed, asserting that the impugned order was legally sound and should not be waived.

5. The Tribunal analyzed the submissions and records, noting the precedent set by a Larger Bench regarding the re-crediting of Cenvat credit without departmental approval. They highlighted the appellant's missed opportunities for hearings and cross-examination, leading to the inference that the appellant lacked substantive support for their defense.

6. Consequently, the Tribunal dismissed the stay application, directing the appellant to deposit the entire duty demand with interest and penalty within a specified timeframe, citing the lack of grounds for waiving the financial obligations during the appeal process. The case was scheduled for compliance on a future date.