2017 (11) TMI 2056 - AT - Central Excise

Reversal of CENVAT Credit - Availment of suo moto credit - not providing proper opportunity to the appellant to defend themselves inasmuch as they were not allowed to cross examine the jurisdictional Superintendent - HELD THAT - It is seen that the issue on merits does not stand discussed by the Lower Authorities, i.e. as to whether the appellants was liable to pay the Cenvat credit or not. If such debit entry was not in fact, required to be made, the facts taking suo-moto credit under intimation to the Revenue would be a correction of the accounts. There are many decisions of the Tribunal lying down that such accounting correction will not require filing of refund claims. In as much the credit entry was made under intimation to the Revenue, the same will have the effect of seeking, Revenues permission. It is deemed fit to set aside the impugned order and remand the same to the Original Adjudicating Authority for examining the issue afresh, first on merits and then on the issue of Suo-moto taking of credit. Appeal allowed by way of remand.

Summary

Issues:
1. Reversal of Cenvat credit by the appellant on the instructions of jurisdictional Range Officer.
2. Appellant's claim of eligibility for Cenvat credit and subsequent reversal of the reversal.
3. Denial of credit, imposition of penalty, and violation of principles of natural justice.

Analysis:
1. The appellant, engaged in manufacturing various products chargeable to central excise duty, reversed Cenvat credit totaling Rs.18,86,138/- in 2008 and 2009 based on the instructions of the jurisdictional Range Officer. Subsequently, they sought to recredit the amount, but faced a show cause notice for wrongly taking suo moto credit. The Addl. Commissioner and Commissioner (Appeals) upheld the denial of credit and imposition of penalty.

2. The appellant argued their eligibility for Cenvat credit, claiming the reversal was done based on incorrect directions. They contended that after realizing the mistake, they informed the authorities and retook the credit, which was also reflected in their returns. They challenged the denial of credit, interest, and penalty, citing violation of natural justice principles due to lack of proper opportunity for defense, including the inability to cross-examine the jurisdictional Superintendent.

3. The Tribunal observed that the Lower Authorities did not address the merits of whether the appellant was liable to pay the Cenvat credit. The Tribunal noted that if the debit entry was not required, retaking credit under intimation to the Revenue could be seen as an accounting correction rather than a refund claim. Considering the lack of discussion on the merits and the issue of taking credit suo moto, the Tribunal set aside the impugned order and remanded the case for a fresh examination by the Original Adjudicating Authority, emphasizing a thorough review of the merits and the credit issue.

This detailed analysis of the judgment highlights the appellant's actions, the authorities' decisions, and the Tribunal's directions for a reevaluation of the case, ensuring a fair consideration of the eligibility for Cenvat credit and addressing the procedural concerns raised by the appellant.