2016 (11) TMI 915 - AT - Central Excise

Suo motu re-availing of credit - Utilisation of Cenvat credit account for payment of Education Cess and S&H Education Cess which the appellant paid through PLA - Held that - the appellant has utilised their Cenvat credit account of BED for payment of Education Cess and S&H Education Cess which they have later on paid through PLA. In that circumstances, the utilisation of Cenvat credit account of BED for payment of Education Cess and S&H Education Cess is double payment of duty by the appellant. Therefore, the appellant has correctly taken suo motu Cenvat credit of Education Cess and S&H Education Cess paid by them by utilised Cenvat credit of BED after payment of Education Cess and S&H Education Cess through PLA. In that circumstances, the impugned proceedings against the appeal were not warranted. Therefore, the impugned order is set aside and the appeal is allowed with consequential relief, if any.

Summary

Issues:
- Appeal against duty demand due to availment of suo motu Cenvat credit in Cenvat credit account.

Analysis:
The appellant, operating in Jammu & Kashmir under Notification No. 56/2002, availed Cenvat credit on basic Excise duty for inputs and cleared finished goods by paying duty through PLA and utilizing Cenvat credit account from April to September and November 2009. They used the Cenvat credit account for Education Cess and S&H Education Cess payment, which was later objected to by the Revenue. A show cause notice was issued for reversal of Cenvat credit of Education Cess and S&H Education Cess, leading to confirmation of duty demand with interest and penalty. The appellant challenged this order.

Upon hearing the parties and examining the submissions, it was established that the appellant had indeed used their Cenvat credit account for Education Cess and S&H Education Cess payments, which were subsequently paid through PLA. This resulted in double payment of duty by the appellant. Therefore, the appellant rightfully took suo motu Cenvat credit for the Education Cess and S&H Education Cess paid by utilizing the Cenvat credit of basic Excise duty. Consequently, the proceedings against the appellant were deemed unwarranted, leading to setting aside of the impugned order and allowing the appeal with any consequential relief.

This judgment clarifies the correct utilization of Cenvat credit accounts and the implications of double payment of duty. It highlights the importance of adherence to tax payment procedures and the validity of taking suo motu credit in specific circumstances. The decision provides clarity on the issue at hand and offers relief to the appellant based on the factual and legal analysis presented during the proceedings.