2018 (1) TMI 200 - AT - Central Excise

Suo moto availment of credit - respondents by mistake deposited certain amount in the closed unit instead of active unit - refund claim - Held that - The appellants can claim refund of the duty deposited in respect of the closed unit; however, they cannot take suo motu credit of the said amount in their operational unit - appeal allowed - decided in favor of Revenue.

Summary

Issues:
Appeal against dropping of central excise duty demand and penalty imposition on Badve Autocomps Pvt. Ltd.

Analysis:
The appeal filed by the revenue concerns the dropping of central excise duty demand and the imposition of penalties on Badve Autocomps Pvt. Ltd. The absence of respondents in the last three hearings led to the appeal being taken up for disposal. The revenue argued that the appellants mistakenly deposited an amount in a closed unit instead of the active unit due to separate registrations. The revenue contended that the amount could not be transferred between units and should have been claimed as a refund for the closed unit. The decision relied on precedents to assert that no suo motu adjustment between units was permissible.

The impugned order highlighted that the Commissioner (Appeals) allowed the benefit based on equity. It was noted that the Waluj unit was closed with no outstanding duty liability, leading to the inadvertent deposit in the Pune unit. The order emphasized that disallowing the credit in the Pune unit would be a narrow interpretation of the law. The absence of a transfer procedure in central excise law was noted, and the Larger Bench's observations from BDH Industries Ltd. were cited to emphasize the requirement for proper officer sanction for refunds. The decision underscored that all refunds, including those for excess duty paid, must adhere to Section 11B of the Central Excise Act and pass the doctrine of unjust enrichment.

Ultimately, the judgment concluded that while the appellants could claim a refund for the duty deposited in the closed unit, they were not entitled to suo motu credit the amount in their operational unit. As a result, the revenue's appeal was allowed, emphasizing the need for adherence to established refund procedures under the Central Excise Act and Rules.