2016 (8) TMI 236 - AT - Central Excise

Suo-mot availing credit of excess duty paid - The appellant mistakenly paid the excise duty on the transportation which was otherwise not required to be paid extended period of limitation - Held that suo moto credit not permissible. Remedy available is refund claim under section 11B. No suppression of fact on the part of appellant. Demand cannot be raised under proviso to Section 11A(1), accordingly extended period cannot be invoked appeal allowed on ground of limitation. - Decided in favor of assessee.

Summary

Issues:
- Appeal against rejection of appeal by Commissioner of Central Excise
- Permissibility of suo moto credit for excess duty paid
- Conflicting judgments on suo moto credit
- Reference to Larger Bench on the issue
- Applicability of extended period for invoking demand

Analysis:
1. Appeal against rejection of appeal: The appeal was directed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals-III), Pune, upholding the Order-in-Original rejecting the appeal. The appellant, engaged in the manufacture of Flushing System of Plastic, paid duty on MRP based valuation under Section 4A of the Central Excise Act, 1944. The issue arose when the appellant mistakenly paid excise duty on transportation, which was not required, and subsequently took suo moto credit in their Cenvat account for the amount paid. The Adjudicating authority confirmed the demand and penalties, leading to the appeal.

2. Permissibility of suo moto credit: The appellant argued that they took credit believing the duty was paid mistakenly and cited various judgments allowing suo moto credit. However, conflicting views led to the matter being referred to the Larger Bench. The Larger Bench, in the case of BDH Industries Ltd., settled the conflict by ruling that only the remedy of filing a refund claim under Section 11B was permissible, disallowing suo moto credit. The appellant's bonafide belief was considered, especially as they explicitly declared the suo moto credit in their return for March 2008, indicating no suppression of facts.

3. Conflicting judgments and reference to Larger Bench: The issue of suo moto credit was marred by conflicting judgments, leading to the reference to the Larger Bench. The Larger Bench's decision clarified that only a refund claim under Section 11B was valid for excess payments, rejecting the permissibility of suo moto credit. The appellant's reliance on the conflicting views and the decision of the Larger Bench supported their argument against the demand.

4. Applicability of extended period: The appellant contended that since the matter was referred to the Larger Bench due to conflicting views, the extended period for invoking the demand could not be applied. Citing the Hon'ble Supreme Court's decision in Continental Foundation Jt. Venture Vs. Commr. of C. Ex. Chandigarh-I, the appellant argued against the demand being time-barred due to the explicit declaration of suo moto credit in their returns, indicating no suppression of facts.

5. Conclusion: The Tribunal, after considering the submissions, found in favor of the appellant. The conflicting views on suo moto credit were resolved by the Larger Bench's decision, emphasizing the need for a refund claim for excess payments. The appellant's timely declaration of suo moto credit in their returns and the absence of suppression of facts led to the demand being considered time-barred. Consequently, the impugned order was set aside, and the appeal was allowed on the ground of limitation alone.