2017 (10) TMI 837 - AT - Central Excise

Re-credit of amount of CENVAT credit wrongly debited - Applicability of section 11B of the CEA, 1944 - job-work - Held that - the appellants/assesses has a right to avail suo moto credit of the wrongly reversed amount - Adjudicating Authority as well as the First Appellate Authority, has erred in holding that the time limitation as provided under Section 11Bof CEA, 1944 will apply. The decision in the case of M/s Krishnav Engineering Ltd. Versus Customs, Excise And Service Tax Appellate Tribunal And Another 2015 (12) TMI 234 - ALLAHABAD HIGH COURT , followed, where it was held that the Cenvat credit taken by the appellant by intimating the department vide their letter dated 25th April, 2005 was in accordance with the procedure provided under Rule 9 of the Rules of 2004. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over recredit of Cenvat Credit amount wrongly reversed by appellant, Application of Sec 11B of CEA, 1944 for recredit, Interpretation of the law for job workers' Cenvat Credit reversal, Applicability of High Court judgment on Cenvat Credit reversal.

Analysis:
The appeal in question pertains to the rejection of claims by the appellant for recredit of an amount previously reversed under misunderstanding of the law. The Adjudicating Authority allowed recredit of a specific amount but rejected a larger sum as time-barred under Sec 11B of the CEA, 1944. The First Appellate Authority also upheld this decision, citing the applicability of Sec 11B. The appellant contended that Sec 11B should not apply to the recredit of wrongly debited Cenvat Credit, asserting a strong legal position.

The appellant, a job worker, had mistakenly reversed a portion of Cenvat Credit related to their own raw material usage. They later sought recredit upon realizing their error, as job workers are not required to reverse such credits. The High Court judgment cited supported the appellant's position, emphasizing that the reversal was merely an accounting entry and not a refund of duty, hence Sec 11B did not apply. The Court highlighted the appellant's compliance with Rule 9 of the Rules of 2004 in availing the Cenvat Credit.

The Tribunal found the High Court's judgment applicable to the present case, allowing the appellant to avail suo moto credit for the wrongly reversed amount. Consequently, the Tribunal held that both the Adjudicating Authority and the First Appellate Authority erred in applying the time limitation under Sec 11B of CEA, 1944. The impugned order was deemed unsustainable and set aside, with the appeal being allowed in favor of the appellant.

In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions, the specific circumstances of the appellant's case, and the persuasive precedent set by the High Court judgment. The ruling clarified the procedural aspects of Cenvat Credit reversal for job workers and emphasized the distinction between refund of duty and mere accounting entry adjustments, ultimately favoring the appellant's right to recredit the wrongly reversed amount.