2019 (2) TMI 206 - AT - Central Excise

Recovery of re-credited amount - suo-moto credit of excess debit made is availed - recovery sought on the ground that the appellant could not have taken suo moto credit whereas they should have followed the procedure of filing of refund under Section 11 - Held that - Larger Bench of this Tribunal in the case of BDH Industries Ltd. 2008 (7) TMI 78 - CESTAT MUMBAI held that there is no provision under Central Excise Act for suo moto refund of excess/ twice paid duty - However in the present case, there is neither excess payment of duty nor twice duty was paid. The duty payable is only the amount which was mentioned in the invoice. It is only due to computer system the huge amount of excess as compared to the actual duty payment shown in the invoice was debited, therefore, this is not a case of either of excess payment of duty or twice payment of duty. Therefore, the decision of Larger Bench is not applicable in the present case. Hon ble Rajasthan High Court dealing with the same issue in the case of J K Laxmi Cement Ltd. 2018 (1) TMI 994 - RAJASTHAN HIGH COURT held that the service tax payment on outward transportation though paid by utilizing cenvat credit but later again paid in cash, the amount paid from cenvat credit account was required to be reversed and the assessee was entitled to take suo moto credit. The suo moto credit of excess debit made by the appellant is eligible to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant can claim re-credit for an excess amount debited in their Cenvat account without following the procedure of filing a refund under Section 11B of the Central Excise Act.

Analysis:
The case involved the appellant, engaged in manufacturing passenger cars, who procured components for their factory and removed input on payment of duty to some vendors. A clerical error led to an excess amount of ?66,05,388/- being debited in their Cenvat account, which they re-credited along with Education Cess. The adjudicating authority ordered recovery of this amount, stating that the appellant should have followed the refund procedure under Section 11B instead of taking suo moto credit.

The appellant argued that the excess amount was a clerical error and not excise duty, hence no refund under Section 11B was required. They cited various judgments to support their claim. On the other hand, the Revenue contended that the appellant was not entitled to suo moto re-credit and should have followed the refund procedure under Section 11B, citing relevant judgments in support.

The Tribunal analyzed the issue and distinguished previous judgments cited by both sides. They noted that the excess debited amount was due to a computer system error and not an excess or twice payment of duty. Referring to the decision of the Larger Bench in BDH Industries Ltd., the Tribunal held that there was no provision for suo moto refund of excess/twice paid duty under the Central Excise Act. However, in this case, as there was no excess or twice payment of duty, the appellant was eligible for re-credit. The Tribunal also referenced the decision of the Hon’ble Karnataka High Court in Motorola India Pvt. Ltd., which allowed refund for amounts paid in excess of duty. They further highlighted other cases where the courts allowed re-credit in similar situations.

In conclusion, the Tribunal found that the appellant was eligible for suo moto credit of the excess amount debited in their Cenvat account. Therefore, they set aside the impugned order and allowed the appeal, ruling in favor of the appellant.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal principles applied by the Tribunal, and the final decision reached after considering the facts and relevant case laws.