2018 (10) TMI 76 - AT - Central Excise

Refund claim - demand recovered during investigation towards reversal of cenvat credit was higher - confirmed demand was much lower than paid on the ground of period of limitation - inadmissible CENVAT credit - fake invoices - Held that - Calculating the inadmissible amount of cenvat credit due penalty equivalent to credit and interest thereof the total amount becomes due from the Appellant in terms of Tribunal s Order is 1, 33, 473/- which the appellant is required to discharge. However during the course of the appellant proceedings an amount of 9, 19, 491/- has been recovered from the appellant. In absence of any other grounds raised by the Revenue on the admissibility of the refund claim of the balance amount in my view the appellants are entitled to refund of 7, 86, 018/-. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Appeal, Availed inadmissible Cenvat Credit, Recovery of credit, Penalty imposition, Suo motu credit availed, Refund claim rejection, Interpretation of Tribunal's order, Liability calculation, Admissibility of refund.

Analysis:
The appeal was filed against Order-in-Appeal No. CD/303/M-II/2016 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone-II. The appellant availed inadmissible Cenvat Credit of ?3,14,658/- during 2001-02 to 2004-05. Upon audit in March 2009, the department discovered this and the appellant reversed the credit with interest. Subsequently, a show cause notice was issued proposing penalty and interest recovery. The appellant also suo motu availed credit of ?3,14,685/- and reflected it in their return. Two show cause notices were issued, and upon adjudication, the appellant's appeals were rejected. The Tribunal's order restricted the recovery of credit to a five-year period and allowed credit availed within five years from the first notice date. A refund claim was filed, which was rejected by the adjudicating authority and confirmed by the Ld. Commissioner (Appeals).

The appellant contended that the Tribunal's order restricted liability to ?1,33,473/-, and the remaining amount was claimed as a refund. The department denied the refund, citing no finding on the second appeal. The Revenue reiterated the Ld. Commissioner (Appeals)'s findings, arguing that the refund was inadmissible based on the second show cause notice date. The Tribunal found the inadmissible credit to be ?30,372/-, not the full amount, and upheld the demand for suo motu credit availed. The total amount due from the appellant as per the Tribunal's order was ?1,33,473/-. However, an amount of ?9,19,491/- had already been recovered. In the absence of other grounds by the Revenue, the appellant was entitled to a refund of ?7,86,018/-.

In conclusion, the impugned order was set aside, and the appeal was allowed with consequential relief, granting the refund to the appellant as per the Tribunal's order.