2018 (6) TMI 1131 - AT - Central Excise

Excess paid duty - Suo-moto Credit availed by the appellant - case of Revenue is that the appellant cannot take the suo motto credit and he is required to file the refund claim after he has paid the excess duty - Held that - The appellant cannot take the suo motto credit of the excess duty paid by him. The appellant is a small scale entrepreneur and has no knowledge of the Excise law and in bona fide belief he has taken the suo motto credit of the excess duty paid by him and therefore there is no infirmity in the said taking of suo motto credit by the applicant - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Remand by High Court directing re-consideration of the matter by Tribunal.
2. Confirmation of demand under Cenvat Credit Rules, 2004 and penalty imposition.
3. Appeal filed before Commissioner (Appeals) and subsequent dismissal.
4. Remand by CESTAT, Bangalore for consideration following principles of natural justice.
5. Confirmation of demand and penalty imposition by lower authority.
6. Challenge against the impugned order.
7. Arguments presented by both parties.
8. Consideration of facts and submissions by the Tribunal.
9. Decision on the sustainability of the impugned order.

Analysis:

1. The appeal was remanded by the High Court directing the Tribunal to re-consider the matter afresh, setting aside the previous order. The lower authority confirmed a demand under Rule 11(2) of Cenvat Credit Rules, 2004, amounting to ?58,333, along with interest and imposed a penalty of ?10,000 under Rule 25 of Central Excise Rules, 2002.

2. The Commissioner (Appeals) dismissed the appeal filed by the appellant, upholding the Order-in-Original. Subsequently, the Hon'ble CESTAT, Bangalore remanded the matter to the adjudicating authority for reconsideration following the principles of natural justice. The lower authority then confirmed the demand and imposed a penalty under Rule 15(1) of Cenvat Credit Rules, 2004.

3. The appellant argued that the impugned order was not sustainable as the facts were not appreciated correctly by the Commissioner (Appeals). The appellant, being a small scale entrepreneur, claimed lack of knowledge regarding Central Excise law and procedures. It was stated that the excess duty paid was taken back as credit in their PLA account under a genuine impression for future duty payments.

4. The learned consultant contended that the show-cause notice was time-barred as it was served after the expiry of one year from filing ER-3 Returns. The appellant's lack of knowledge and genuine belief in taking suo motto credit of excess duty paid were highlighted as reasons for not penalizing the small scale entrepreneur.

5. The Tribunal, after hearing both parties and examining the material on record, found that the appellant had paid dues at a higher rate and subsequently took suo motto credit in their PLA account. The Tribunal held that the objection of the Revenue against taking suo motto credit was not valid, given the appellant's lack of knowledge and bona fide belief. Consequently, the impugned order was deemed unsustainable in law, and the appeal of the appellant was allowed with consequential relief.