2019 (7) TMI 2028 - AT - Central Excise

Refund of the excess credit reversed by them in terms of Rule 6 of CCR 2002/2004 as Rule 6 was amended retrospectively vide Sections 72 and 73 of the Finance Act, 2010 - recovery of interest. Whether the appellants are entitled for refund of excess credit reversed by them? - HELD THAT - The issue of restoring the credit by the appellants where credit has been reversed in excess has been settled in favour of the appellants. It is not the case of the Department that the credit or duty for that matter requires to be paid twice. The appellants have reversed the credit before the order of the confirmation of reversal in view of Hon ble Supreme Court s judgment in the case of Ballarpur Industries 1989 (9) TMI 102 - SUPREME COURT . The appellants have demonstrated that they have only availed the credit and have not utilised it. As longs as the credit is not utilised, the entries in the register are just book entries and by no stretch of imagination can be treated as duty paid so as to invite the provisions of Section 11B of CEA 1944. The Assistant Commissioner himself has found that provisions of unjust enrichment are not applicable in such cases. In view of the judgment cited, the appellants are entitled to take recredit of the excess reversal. Whether they are liable to pay interest on the amount held to be reversable by the learned Commissioner? - HELD THAT - In view of the wordings of Rule 14 of CCR, payment of interest, if any, comes into play only when the credit is utilised. As the appellants have successfully demonstrated the credit is not utilised, the payment of interest is not warranted. Appeal allowed.

Summary

Issues involved:
The issues involved in this case are whether the appellants are entitled to a refund of excess credit reversed by them and whether they are liable to pay interest on the amount held to be reversable by the learned Commissioner.

Summary:
The appellants, engaged in the manufacture of Viscose Staple Fibre (VSF) and wood pulp, captively consumed wood pulp and transferred it to their units. They informed the Deputy Commissioner of Central Excise about their intention to avail CENVAT credit on inputs used in wood pulp manufacture. A show-cause notice was issued proposing a demand, which led to the reversal of credit under protest. The Commissioner confirmed a demand but denied restoration of excess credit reversed by the appellants. The appellants appealed against this decision.

Appellants' Arguments:
The appellants claimed they were entitled to a refund of excess credit reversed by them due to retrospective amendments to Rule 6 of CENVAT Credit Rules, 2004. They argued that the reversed credit is merely a deposit and should be restored to them. They contended that interest should not be payable as the credit was not utilized. They also cited relevant case laws to support their position.

Decision:
After considering the arguments, the Tribunal found in favor of the appellants. It was established that the appellants had only availed the credit and not utilized it. The entries in the register were deemed as book entries and not duty paid, hence not subject to Section 11B of the Central Excise Act, 1944. The Tribunal held that the appellants were entitled to recredit the excess reversal and that payment of interest was not warranted as the credit was not utilized. The appeal was allowed in favor of the appellants.

Conclusion:
The Tribunal's decision allowed the appellants to take recredit of the excess reversal and determined that payment of interest was not necessary in this case. The judgment was pronounced on 18/07/2019.