2019 (3) TMI 412 - AT - Central Excise

Suo moto credit availed on wrongly paid CENVAT Credit - amount reversed on being pointed out and refund claim filed - time limitation - rejected only the ground that it was submitted beyond one year from the date of making excess payment i.e. December, 2014 - Section 11B of Central Excise Act, 1944 - Held that - The time period of one year for filing a refund claim as prescribed under Section 11B ibid, is not applicable in case of refund of duty tax, which was paid excess or paid under mistake of law. It is not disputed that the appellant had paid the excess amount in the month of December, 2014 and immediately on realizing their mistake, the appellant very promptly Look re-credit of the same in their CENVAT Credit Register in the month of January, 2015. The re-credit entries were reversed because of advice by the department and a refund claim was filed. The Appellants cannot be penalised for action taken by them at the instance of Revenue Authorities which itself was not in accordance with law. Appeal allowed - decided in favor of appellant.

Issues involved:
1. Refund claim rejected on the ground of limitation under Section 11B of Central Excise Act, 1944.
2. Appellant's contention regarding the permissibility of suo moto recredit for rectifying errors.
3. Interpretation of legal precedents supporting appellant's case.
4. Application of the decision in BDH Industries Ltd. vs. CCE 2008.
5. Analysis of the decision of the Hon'ble High Court of Judicature at Madras in ICMC Corporation Ltd case.
6. Consideration of the decision of the Hon'ble High Court of Karnataka at Bangalore in Commissioner of Central Excise, Bangalore-III vs. Motorola India Pvt. Ltd.

Analysis:
1. The appeal was filed against the rejection of a refund claim by the Commissioner based on the limitation under Section 11B of the Central Excise Act, 1944. The refund claim was made on 01.07.2016 for an excess payment made in December 2014, which was beyond the one-year limitation period. The authorities failed to consider the correction of a wrong entry rather than a refund of duty, as the excess payment was rectified by the appellant promptly.

2. The appellant argued that suo moto recredit for rectifying errors is permissible based on various decisions of High Courts and Tribunals. The Range Superintendent's direction to reverse the re-credit amount was challenged as incorrect. The appellant cited legal precedents to support their case, emphasizing that the re-credit taken in January 2015 was correct, and the subsequent reversal was done as per the department's advice, not in accordance with the law.

3. The appellant relied on legal precedents such as ICMC Corporation Ltd vs. CESTAT, Chennai, Krishnav Engineering Ltd vs. CESTAT, and Union of India vs. J.K. Laxmi Cement Ltd to support their argument regarding the permissibility of suo moto recredit. They contested the applicability of the decision in BDH Industries Ltd. vs. CCE 2008 cited by the Commissioner, stating it was not relevant to the present case.

4. The decision in BDH Industries Ltd. vs. CCE 2008 was considered, with the appellant arguing that the credit entry made in January 2015 was not wrong or illegal. The Larger Bench's decision was deemed inapplicable as the issue pertained to correcting a wrong debit entry rather than a refund of duty. The appellant's prompt rectification of the error was highlighted to support their case.

5. The decision of the Hon'ble High Court of Judicature at Madras in ICMC Corporation Ltd case was analyzed, where the court ruled in favor of the appellant. The court emphasized that the reversal of credit entry did not result in an outflow of funds and was merely a correction of an account entry. The court held that the appellant was entitled to take suo moto credit as per the Cenvat Credit Rules, 2004.

6. The decision of the Hon'ble High Court of Karnataka at Bangalore in Commissioner of Central Excise, Bangalore-III vs. Motorola India Pvt. Ltd. was considered, where the court rejected the Revenue's appeal. The court held that the time bar does not apply in cases where the amount was paid by mistake and that the appellant cannot be penalized for actions taken based on incorrect advice from Revenue Authorities. The court emphasized that the limitation prescribed under Section 11B of the Central Excise Act, 1944 was not applicable in such cases.

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