2015 (10) TMI 1644 - AT - Central Excise

Denial of CENVAT Credit - manufacture of exempted final products - whether the appellant was right in taking recredit of ₹ 4,30,325/- or they were required to file a refund application in terms of provisions of Section 11B of Central Excise Act - Held that - there is no dispute about the fact that the said credit which was originally debited, was not taken into account at the time of final debit of the inadmissible CENVAT credit. As such admittedly there was double debit entries. - Denial of the same by the department on the technical ground of non-filing of refund application is neither proper nor justified. It is nothing but correction of entries in the accounts maintained by the assessee, which do not involve any lis and any legal issue requiring the department to interfere. Further the said recredit was made under intimation to the Revenue in which case if the Revenue had any objection, they should have raised the same at the point of recredit itself. - no reason to uphold the impugned order. Accordingly, the same is set aside - Decided in favour of assessee.

Summary

Issues Involved:
Whether the appellant was entitled to recredit CENVAT amount without filing a refund application under Section 11B of Central Excise Act.

Analysis:
The case involved the appellant, engaged in manufacturing pay phones and telecom equipment, who availed CENVAT credit for inputs used in both exempted and dutiable products. Following an audit, they were directed to reverse CENVAT credit related to inputs used in exempted products, which they did by reversing an amount. However, investigations later revealed a higher amount to be reversed, leading to a double reversal error. The appellant then recredited the initial reversed amount to their CENVAT account, notifying the Central Excise Authorities. Despite this, they were issued a show-cause notice alleging they were not entitled to recredit without filing a refund application as per Section 11B of the Central Excise Act.

The main issue for determination was whether the appellant rightfully recredited the amount without filing a refund application. The tribunal noted that the credit initially debited was not considered during the final debit of inadmissible CENVAT credit, resulting in double debit entries. Referring to a judgment by the High Court of Madras in a similar case, it was established that a suo moto recredit of CENVAT did not necessitate a refund claim under Section 11B. The tribunal found this precedent applicable to the present case, emphasizing that the denial of recredit by the department on technical grounds was unjustified. The recredit was viewed as a correction of entries without any legal dispute or interference required from the department.

In conclusion, the tribunal set aside the impugned order and allowed the appeal, citing that the recredit of the CENVAT amount by the appellant was valid and did not necessitate a refund application under Section 11B. The decision was based on the principle that the recredit was a correction of entries and did not involve any legal issue requiring departmental intervention.