2019 (7) TMI 444 - AT - Central Excise

Re-credit of CENVAT - recovery of credit availed by them on the ground that they have availed inadmissible credit without the valid documents - Rule 14 of Cenvat Credit Rules - penalty - HELD THAT - The Respondent had paid service tax from cenvat credit, but the same was objected by the department. The Respondent then paid the said service tax amount in cash. Once they paid the service tax in cash, they become eligible for the re-credit of amount paid by them from cenvat. The issue is no more res - integra and the same stands decided in various judgments of Hon ble High Court and Tribunal wherein it was held that when the tax stands paid twice, the excess amount is not a tax but has to be considered as deposit. It is further observed that the revenue itself did not treat the amount paid thru cenvat as service tax as the respondent was insisted to pay in cash. Accordingly, once the revenue discarded the payment thru cenvat as service tax and got the equal amount deposited from respondent thru cash, the amount initial utilised from cenvat amount stand re-creditable to the respondent. The Appellant s suo moto availment of credit cannot be found fault with - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Validity of refund claim and imposition of penalty under Cenvat Credit Rules.
2. Compliance with relevant provisions of law by the Respondent.
3. Entitlement to take suo moto credit when duty has been paid twice.

Analysis:
1. The appeal was filed by the revenue against an Order-in-Original passed by the Commissioner, Central Excise, Customs & Service Tax. The Respondent had deposited service tax on GTA Services from their cenvat account, which was objected to by the department. Subsequently, the Respondent paid the tax in cash and filed a refund claim, which was rejected. The Respondent then availed suo moto credit, leading to the issuance of a show cause notice proposing recovery and penalty under Rule 14 of Cenvat Credit Rules. The Adjudicating authority allowed the credit but imposed a penalty of ?1 lakh for violating procedural law.

2. The revenue contended that the Respondent did not comply with relevant provisions of law, and the adjudicating authority failed to specify the provisions complied with. The issue of taking suo moto credit was raised, citing a Tribunal judgment and the case of BDH Industries Ltd. The Respondent argued that they paid the service tax in cash after objections, making them eligible for re-credit from cenvat, as established in various judgments by High Courts and Tribunals.

3. The Tribunal examined the facts and legal precedents, including the case of Motorola India Pvt. Ltd. where the Hon'ble High Court held that excess amount paid should be considered a deposit when tax is paid twice. Reference was made to the J.K. Lakshmi Cements case, emphasizing the eligibility for suo moto credit when duty is paid twice. The Tribunal upheld the Respondent's suo moto credit availment, noting that the revenue treated the cenvat payment as not fulfilling the service tax requirement, leading to re-credit eligibility once cash payment was made. The appeal by the revenue was dismissed based on the discussions and cited judgments.

This detailed analysis covers the issues raised in the legal judgment comprehensively, highlighting the arguments presented by both parties and the Tribunal's decision based on legal precedents and interpretations of relevant laws and rules.