2015 (6) TMI 689 - AT - Central Excise

Exemption Notification No.10/2003 - CENVAT Credit - appellants had manufactured and cleared hand pumps by availing exemption - Held that - Assessee is required to file an application along with a Chartered Accountant certificate after making payment of the amount of duty with interest. If the Commissioner finds that the amount paid is not correct, he is required to ensure that the verification is done within two months and the shortfall, if any, is intimated to the assessee within two months and thereafter the assessee is required to make payment within 10 days of such communication. It is not the case of the Revenue that in this case, the appellant had not made the payment correctly and there was a shortfall and there was a communication of such shortfall to the assessee. The section nowhere requires the Commissioner to pass an order or communicate that the amount paid is correct in accordance with law. Once the Commissioner does not send any communication within two months, the matter has to be considered as finalized as per the provisions of Section 73 - Obviously, there is no case for the Department to demand 10% of the amount received by the appellant in respect of exempted hand-pumps once the assessee fulfilled the obligations caused on him under Section 73 giving retrospective effect to the provisions of Rule 6 of CCR 2004. Therefore I find that the litigation started by the Department was under a mis-conception and the first appeal itself should not have been filed. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Rule 6(3)(b) of CENVAT Credit Rules (CCR), 2004 regarding payment of 10% value for hand pumps cleared without duty payment.
2. Application of retrospective amendment under Section 73 of the Finance Act, 1994 in relation to the payment of credit attributable to exempted goods.
3. Power of Additional Commissioner to accept payment under Section 73 and the requirement of Commissioner's communication on correctness of the amount paid.

Detailed Analysis:
1. The case involved the appellant, engaged in manufacturing hydraulic pumps, availing CENVAT credit but also manufacturing hand pumps under exemption Notification No.10/2003. The issue arose when the appellant took credit on common inputs for exempted products, contrary to rules. The appellant reversed the credit before a show-cause notice was issued, but the notice demanded 10% of the value under Rule 6(3)(b) of CCR. A retrospective amendment allowed the appellant to pay the proportionate credit with interest. The Additional Commissioner dropped the proceedings after the appellant fulfilled obligations under Section 73 and applied to the Commissioner.

2. The Revenue appealed, arguing the Additional Commissioner lacked power to accept payments under Section 73 retrospectively. The Commissioner (Appeals) sided with the Revenue, leading to the appellant's appeal before the Tribunal. The appellant contended that the Revenue's stance was incorrect as the statute did not require the Commissioner to pass an order on the payment's acceptance. The appellant suggested deciding the appeal instead of considering a stay application.

3. The Tribunal analyzed Section 73, highlighting the requirement for an application with a Chartered Accountant certificate post-payment, verification by the Commissioner within two months, and communication of any shortfall to the assessee. As the Revenue did not indicate any payment shortfall or communicate within two months, the matter should be considered finalized as per Section 73. The Tribunal found the Additional Commissioner's decision aligned with the law, indicating the Department's misconception in initiating the appeal. Consequently, the appeal was allowed, providing consequential relief to the appellant.