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2018 (11) TMI 1277 - AT - Central ExciseSuo motu adjustment of excess credit wrongly reversed - amount paid by mistake - Held that - The appellant has taken suo motu credit of the excess amount paid by them - before taking recredit, the appellant has intimated to the Department vide their letter dt. 29/03/2013 duly acknowledged and they have shown the same in their ER1 returns filed for the month of June 2012 and further they have also produced a CA certificate showing that the payment was an inadvertent clerical error and there is no unjust enrichment accruing to the appellant. The appellant clearly show that the excess duty paid can be suo motu adjusted and there is nothing wrong in it. Appeal allowed - decided in favor of appellant.
Issues:
1. Recovery of excess duty paid and availed as CENVAT credit without proper procedure. 2. Imposition of penalty on the appellant for availing irregular/ineligible CENVAT credit. 3. Legal validity of taking suo motu credit without applying for refund or proper officer's sanction. 4. Applicability of statutory provisions and procedural technicalities in the case. Analysis: Issue 1: Recovery of excess duty paid and availed as CENVAT credit without proper procedure The case involved the appellant, engaged in manufacturing automobile and medical equipment parts, who paid excess duty amounting to ?3,17,327 by utilizing CENVAT and PLA in June 2012. Subsequently, the excess duty paid was availed suo-motu in the CENVAT account in March 2013 without following the refund application process or obtaining officer's sanction. The adjudicating authority confirmed the demand for CENVAT credit along with interest and imposed a penalty. However, the Commissioner(Appeals) upheld the recovery of duty and interest but dropped the penalty. The appellant argued that the excess payment was a clerical error, and they did not avail any irregular CENVAT credit. They also contended that the suo-motu credit was a mere accounting adjustment and not subject to Section 11B of the Act. The appellant presented a CA certificate to support their claim of inadvertent clerical error and absence of unjust enrichment. Issue 2: Imposition of penalty on the appellant for availing irregular/ineligible CENVAT credit The appellant challenged the imposition of penalty, arguing that the impugned order was contrary to statutory provisions and based on assumptions. They maintained that the excess payment was a clerical error and not an irregular CENVAT credit. The appellant cited various decisions supporting their position that the suo-motu adjustment of excess credit, due to a mistake, is permissible under the law. The appellant emphasized that procedural technicalities should not override substantial justice, and the penalty was unjustified in their case. Issue 3: Legal validity of taking suo motu credit without applying for refund or proper officer's sanction The Tribunal considered the appellant's submission, CA certificate, and the communication with the Department regarding the excess payment. After reviewing the material on record and the decisions cited by the appellant, the Tribunal found that the appellant had intimated the Department about the excess payment, and there was no unjust enrichment. The Tribunal relied on the decisions presented by the appellant to conclude that the excess duty paid could be suo-motu adjusted, setting aside the impugned order and allowing the appeal with consequential relief. Issue 4: Applicability of statutory provisions and procedural technicalities in the case The Tribunal analyzed the legal validity of the appellant's actions in availing the excess CENVAT credit suo-motu without following the prescribed refund application process. By considering the communication with the Department, the CA certificate, and the absence of unjust enrichment, the Tribunal determined that the impugned order was not sustainable. The Tribunal emphasized the importance of following established legal principles and precedents in addressing cases involving inadvertent errors and clerical mistakes, ultimately ruling in favor of the appellant based on the legal interpretations and precedents cited during the proceedings.
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