2016 (10) TMI 73 - AT - Central Excise

Recovery of suo moto cenvat credit alongwith imposition of penalty - Cenvat credit availed without any duty paying documents or specific order to avail the credit - Held that - the appellant has categorically submits that they have not filed any refund claim pursuance to the order of the Tribunal 26.2.2006 as they already taken the sue motto credit. Since, for the duty liability involving the same period two proceedings were initiated and it has been held in the refund proceeding that the Appellant are eligible to the refund and the Appellant claims that no refund has claimed pursuant to the CESTAT Order as they had already taken suo motto credit of the refund amount in their CENVAT Credit account, therefore, the disposal of the present case is automatic. Therefore, the impugned order is set aside. - Appeal disposed of

Issues Involved:
1. Availment of Cenvat Credit without duty paying documents.
2. Imposition of penalty and personal penalty on the Director.
3. Appeal against the order reducing penalty and setting aside confiscation of goods and personal penalty.
4. Payment of duty liability under Rule 8 of Central Excise Rules, 2002.
5. Refund claim for Cenvat Credit.
6. Rejection of refund claim and appeal to the Tribunal.
7. Allowance of refund of cash amount by the Tribunal.
8. Dispute over allowing suo moto Cenvat credit.
9. Tribunal's decision on the legality of utilizing Cenvat credit during the default period.
10. Initiation of proceedings for recovery of the suo moto credit.
11. Eligibility for refund and claim of already taking suo moto credit.

Analysis:
1. The appellant, engaged in manufacturing HDPE/POP woven fabrics, availed Cenvat Credit without duty paying documents, leading to a demand notice for recovery and imposition of penalties. The Commissioner (Appeal) upheld the demand but reduced the penalty and set aside confiscation of goods and personal penalty. The appellant appealed against this decision.

2. The appellant contended that they paid duty liability under Central Excise Rules during the default period and later paid the amount in cash, filing a refund claim for the Cenvat Credit. The Tribunal previously allowed their refund claim. The Revenue did not dispute the cash refund but objected to allowing the suo moto Cenvat credit.

3. The Tribunal, referring to its previous order allowing the cash refund, noted that the appellant had taken suo moto credit of the amount reversed earlier. As the appellant had not filed a refund claim following the Tribunal's order, the present proceedings for recovery of the credit were deemed unnecessary. The Tribunal set aside the impugned order and disposed of the appeal accordingly.

4. The legal validity of utilizing Cenvat credit during the default period was affirmed based on a decision of the Hon'ble Gujarat High Court, leading to the Tribunal's decision to allow the refund previously paid in cash. The Tribunal's analysis focused on the appellant's actions in taking suo moto credit and the absence of a refund claim following the Tribunal's order, resulting in the automatic disposal of the case.

5. The Tribunal's decision highlighted the appellant's eligibility for the refund and the assertion that no refund claim was made due to already taking suo moto credit, leading to the setting aside of the impugned order and the disposal of the appeal based on the circumstances surrounding the utilization of Cenvat credit and the refund claim process.

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