2019 (4) TMI 1964 - AT - Central Excise

Refund of CENVAT Credit - suo-moto re-credit - fulfilment of condition that the exports were to be completed within six months from the date of removal from the factory and to be evidenced by submission of duly endorsed ARE-1s - HELD THAT - Credit of duties/taxes paid can be taken in accordance with rule 3 of CENVAT Credit Rules 2004 on receipt of eligible inputs capital goods and input services against documentation prescribed therein. The eligibility for such availment is not in dispute here. On the contrary it is the failure to discharge of liability on output by failure to comply with condition of exemption that led to debit of the duty. The consequent restoration the credit on the basis of duly endorsed ARE-1s does not appear to have the sanction of Rules. The sole circumstance in which suo motu credit can be recorded did not prevail when respondent reversed the debit. In the absence of legal provision for restoration the action of the respondent does not have authority of law. The respondent herein was an exporter and the factum of exports is not in dispute. The eligibility for refund of the CENVAT credit debited towards the payment of duty on immediate inability to establish evidence of export is also not in dispute. Furthermore the respondent had been at pains as pointed out by the first appellate authority to report the restoration of credit as and when it occurred. There is thus no ground for alleging suppression fraud or misrepresentation of any kind. Therefore the demand stands barred by limitation of time as held by the first appellate authority. Appeal dismissed.

Summary

Issues:
- Correctness of setting aside the demand as barred by limitation of time
- Entitlement to credit availed suo motu

Analysis:
1. The appeal concerns the correctness of the order setting aside the demand due to limitation of time, despite the respondent not being entitled to credit of a specific amount availed suo motu. The respondent, a manufacturer of 'seamless pipes', had been availing CENVAT credit as per prescribed procedures. Failure to provide necessary documentation for exports led to a duty liability of a significant amount being debited and later re-credited upon proof of export being accepted by the Assistant Commissioner.

2. The original authority relied on a Tribunal decision regarding the legality of suo motu re-credit, which was contested by the respondent citing a different Tribunal decision. The issue revolved around the restoration of credit after initial failure to comply with export documentation requirements. The respondent's actions were deemed not authorized by law due to the absence of specific provisions allowing for such restoration.

3. The Tribunal's decision in a related case highlighted the distinction between MODVAT credit under previous rules and the current CENVAT Credit Rules, emphasizing the lack of legal basis for the respondent's restoration of credit. The respondent's status as an exporter, the undisputed fact of exports, and the timely reporting of credit restoration were crucial factors in determining that the demand was barred by limitation of time, with no evidence of suppression, fraud, or misrepresentation.

4. Ultimately, the appeal was dismissed as lacking merit, with the cross-objection also disposed of. The judgment emphasized the importance of adhering to legal provisions and procedures regarding credit availment and restoration, highlighting the significance of timely compliance and documentation in excise duty matters.

Conclusion:
The judgment focused on the legality of restoring credit availed suo motu and the applicability of limitation of time in demanding duty payments. It underscored the necessity of strict adherence to procedural requirements and the absence of legal provisions for unauthorized credit restoration. The decision highlighted the importance of timely compliance and accurate reporting in excise duty matters, ultimately leading to the dismissal of the appeal and cross-objection.