2018 (11) TMI 1370 - AT - Central Excise

Recovery u/s 153 of the Finance Act, 2003 - Department entertained the view that in pursuance of retrospective amendment through Notification Nos.32/99 & 33/99 both dated 08.07.1999 must not be adjusted from Cenvat Credit Account - Held that - The Hon ble High Court in the case of M/s Eminent Health Care and Cosmetics Pvt. Ltd. and Others Vs. UOI 2006 (9) TMI 597 - GAUHATI HIGH COURT , upheld the retrospective amendment and also held that the petitioners were required to pay back the refund granted to them in excess. Therefore, the excess amount of refund availed by the appellants are required to be recovered by the Department. In this case, only one product was manufactured by the appellant and even if, the refund was to be granted through PLA account, the same would have been available by way of cenvat credit to the respondents making situation revenue neutral. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Recovery under Section 153 of the Finance Act, 2003 through Cenvat Credit Account.
2. Availment of exemption under Notification No.33/99-CE dated 08.07.1999.
3. Correctness of payment through Cenvat Credit Account.
4. Interpretation of retrospective amendment through Notification Nos.32/99 & 33/99 dated 08.07.1999.
5. Compliance with the law laid down by the Hon'ble Guwahati High Court.
6. Utilization of Cenvat Credit for payment of excess refund.
7. Revenue neutrality in utilizing credit for payment of excess refund.

Analysis:
1. The appeals by the Revenue contested the recovery under Section 153 of the Finance Act, 2003, arguing against payment through Cenvat Credit Account. The issue involved the retrospective amendment of Notification No.33/99-CE and the demand for excess refund granted to the respondents. The Department contended that the payment through Cenvat Credit Account was incorrect, while the lower adjudicating authority supported the appellant's method of payment. The matter was remanded by CESTAT for a fresh decision, emphasizing the need for proper calculation and hearing the appellants.

2. The Department's appeal before the Commissioner (Appeals) challenged the lower Adjudicating Authority's order permitting the reversal of refund through Cenvat Credit Account. The issue was influenced by the judgment of the Hon'ble High Court of Guwahati in a similar case, upholding the demand raised by the Department. The respondent argued that the utilization of credit for payment of excess refund did not violate the law, citing circulars clarifying the amendment's purpose and emphasizing revenue neutrality in the process.

3. The Tribunal considered the submissions and case records, noting the High Court's decision upholding retrospective amendments and the requirement for recovering excess refund amounts. The respondent's argument that no goods beyond those covered by the notification were manufactured, making the situation revenue neutral, was deemed valid. The Tribunal also referenced a relevant Department of Revenue letter discussing the retrospective amendment's intent and its impact on credit utilization, supporting the respondent's position.

4. Based on the discussions and submissions, the Tribunal found no infirmity in the Commissioner (Appeals)'s order and upheld it, ultimately dismissing the appeals filed by the Department. The decision was grounded in the considerations of the retrospective amendment, the High Court's judgment, and the revenue neutrality maintained in the utilization of credit for the refund payment. The judgment was pronounced on 24.09.2018.