2019 (6) TMI 408 - AT - Central Excise

Suo moto credit of Excise duty paid twice or Refund claim - Section 11B of the Central Excise Act, 1944 - HELD THAT - In this case, it is an admitted fact on record that the appellants had paid duty twice, once at the time of removal of transformer from the factory and subsequently on removal of the transformer oil. There is no statutory mandate for double payment of duty and in such cases, a manufacturer of excisable goods is permitted under the statute to claim refund of Central Excise duty paid in excess. Refund claim is governed under Section 11B ibid. The said statutory provision prescribes inter alia, the time limit for filing of refund application and fulfilment of the aspect of doctrine of unjust enrichment. Since the issue involved in this case pertains to double payment of duty on transformer oil, the only recourse left to the appellants was to claim refund of the excess duty paid by it, in terms of Section 11B ibid, which admittedly has not been complied with by the appellants. The applicants have also taken the stand that since they have availed suo motto credit within one year from the date of payment of the duty amount, such availment of credit should be treated as refund claim. We are of the considered view that such stand of the appellants are not legally tenable, for the reason that Section 11B of the Act clearly provides the modalities for filing of refund claim and entertaining of the same by the authorities. Since no formal refund application was filed, the case of the appellants is outside the scope and purview of Section 11B ibid. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
Double payment of excise duty on transformer oil; Validity of taking suo motto credit in Cenvat account without filing refund application; Interpretation of Section 11B of the Central Excise Act, 1944; Applicability of judicial precedents on refund claims and suo motto credit.

Analysis:

1. Double Payment of Excise Duty on Transformer Oil: The case involved the appellants inadvertently paying excise duty twice on transformer oil. The appellants realized their mistake and took credit of the duty paid on the oil in their Cenvat account. The dispute arose when the department initiated proceedings seeking recovery of the wrongly availed Cenvat Credit. The issue centered around whether the double payment of duty warranted a refund claim or if taking suo motto credit was justified.

2. Validity of Taking Suo Motto Credit: The appellants argued that since they had paid the duty twice, taking suo motto credit in the Cenvat account was proper. However, the Revenue contended that Cenvat credit is equivalent to excise duty, and the only recourse for the appellants was to file a refund application under Section 11B of the Central Excise Act, 1944. The debate revolved around the statutory provisions governing the utilization of Cenvat credit and the absence of a mechanism for suo motto credit.

3. Interpretation of Section 11B of the Central Excise Act: The Tribunal analyzed Section 11B, which governs refund claims under the Central Excise Act. It was emphasized that the statute does not provide for the direct taking of suo motto credit without following the prescribed refund application process. The Tribunal referred to the doctrine of unjust enrichment and highlighted the requirement for claimants to demonstrate that the tax or duty has not been passed on to others.

4. Applicability of Judicial Precedents: Both parties relied on various judicial precedents to support their arguments. The appellants cited judgments suggesting that suo motto credit was a valid adjustment, while the Revenue relied on decisions emphasizing the need for refund applications in cases of excess duty payment. The Tribunal distinguished the cited judgments based on their relevance to the specific facts and issues of the case at hand.

In conclusion, the Tribunal dismissed the appeal, upholding the impugned order that favored the Revenue. The decision was based on the statutory provisions governing refund claims, the absence of provisions for suo motto credit, and the principles laid down by the Hon'ble Supreme Court regarding refund applications and unjust enrichment. The analysis highlighted the importance of following the prescribed procedures for claiming refunds under the Central Excise Act.