2016 (2) TMI 719 - AT - Central Excise

Demand of interest - Taking suo-moto credit of duty paid earlier for with refund was sought for - Held that - As regard the refund application, the applicant has filed refund claim immediately after settling the dispute of classification vide their application dated 20/2/1997, which was disputed and matter of the refund was finally decided by this Tribunal vide Order dated 20/8/2008 thereafter it is the department who was supposed to grant the refund by implementing this Tribunal s order. However, the appellant had taken suo moto credit. In view there is no provision in Law to take suo-moto credit of any amount paid during the litigation of the matter, the only course of action is to seek refund under Section 11B. However, refund application was already filed with the department and it was not processed. In view of this Tribunal order dated 24/1/2008 there is no dispute that appellant is entitle for refund alongwith consequential relief. In view of this fact, direct appellant to reverse the Cenvat credit taken suo moto by them and the Adjudicating authority is directed to sanction the refund claim in accordance with law. Taking into consideration the facts and the circumstances of the case, since the appellant was entitled to refund after Tribunal order dated 24/1/2008 it is a case of Revenue neutral therefore interest and penalties are dropped. Due to peculiar facts involved in the case, since appellant had taken credit and enjoyed credit, they are not entitle for the interest only for the period i.e. from the date of taking suo moto credit till the sanction of refund claim

Summary

Issues:
Classification dispute settlement, refund claim procedure, validity of suo moto credit, applicability of Cenvat Credit Rules, imposition of penalty.

Classification Dispute Settlement:
The case involved a dispute regarding the classification and denial of an Exemption Notification for goods manufactured by the appellant. The Tribunal's order settled this dispute, which was later challenged by the department in the Supreme Court and ultimately dismissed. The appellant had paid the entire excise duty demand and penalty during the proceedings.

Refund Claim Procedure:
After the settlement, the appellant filed a refund claim for the amount paid, which was credited to the Consumer's Welfare fund instead of being refunded to the appellant. The Revenue and the appellant both appealed against this decision, leading to a series of orders and appeals before different authorities.

Validity of Suo Moto Credit:
The appellant, upon intimating the department, had taken suo moto credit of the amount for which the refund was sought. The department issued a show cause notice, challenging the re-credit taken by the appellant. The adjudicating authority initially dropped the proceedings, but the Revenue appealed, leading to the current case.

Applicability of Cenvat Credit Rules:
The Ld. Commissioner (Appeals) disallowed the re-credit taken by the appellant, citing a lack of provision in the law for such action. The appellant argued that their refund application was already filed under Section 11B, and the Tribunal had allowed their appeal, making them entitled to the refund.

Imposition of Penalty:
The Ld. Commissioner (Appeals) demanded interest and imposed an equivalent penalty on the appellant. However, the Tribunal found that the appellant was entitled to the refund after its order and directed them to reverse the Cenvat credit taken suo moto. The Adjudicating authority was instructed to sanction the refund claim, and interest and penalties were dropped due to the peculiar facts of the case, making it a revenue-neutral situation.

In conclusion, the appeals were disposed of with the direction for the appellant to reverse the credit taken and for the refund to be granted in accordance with the law. Interest was only applicable for the period from the date of taking the suo moto credit until the refund claim's sanction.