2019 (7) TMI 1407 - AT - Central Excise

CENVAT Credit - suo moto re-credit - appellants have availed the credit and paid the duty through CENVAT credit which was in violation of Rule 8(3A) of the CCR - improper documents - ineligibility in terms of Rule 9 and Rule 11(2) of CCR - HELD THAT - Both the authorities have wrongly held that appellants have taken the credit on the basis of challan which is not a valid document to take CENVAT credit as per Rule 9 of the CCR. Perusal of statement of input credit submitted by the appellant for the period October-December 2014, the appellants have used the words CENVAT credit reversed 05/10/2013 to 26/11/2013 - further, the appellant was asked to reverse the credit earned and utilized by them only on 26/11/2014 and thereafter he paid the amount and interest in cash and once he paid the amount and the interest in cash on 26/11/2014, then he is entitled to take the recredit of input credit because there is no dispute by the Department that the appellant has once paid the duty through the CENVAT credit and subsequently at the instance of the Department paid the duty in cash along with interest and thereafter has taken the recredit in the cenvat credit account. On identical facts, the Tribunal in the case of total Environment Woodwork P. Ltd. Vs. CCE, C ST, Bangalore-I 2017 (1) TMI 1534 - CESTAT BANGALORE has held that once it is proved that the appellant has paid the duty twice once through CENVAT credit and again in cash along with interest, then the appellant is well within his right to take the recredit of the same - In the present case also, firstly the appellant has paid the duty through CENVAT credit account during the disputed period and later on at the direction of the Superintendent, they paid the duty along with interest in cash and took recredit in their CENVAT credit account which is permitted in law as he is not required to pay the duty twice. The impugned order denying the recredit is not sustainable in law and therefore the impugned order is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Reversal of CENVAT credit and subsequent recredit by the appellant.
2. Allegations of improper documentation and ineligibility of CENVAT credit.
3. Confirmation of demand, interest, and penalty by the original authority.
4. Rejection of appeal by the Commissioner (Appeals).
5. Legal sustainability of the impugned order.

Reversal of CENVAT credit and subsequent recredit by the appellant:
The appellant, an SSI unit, had initially availed CENVAT credit during a disputed period but subsequently reversed the credit and paid the duty in cash as directed by the Department. The appellant then sought recredit of the same amount in their CENVAT credit account. The learned counsel argued that the recredit was justified as the appellant had paid the duty twice, first through CENVAT credit and then in cash, and therefore, the recredit was rightfully claimed.

Allegations of improper documentation and ineligibility of CENVAT credit:
The original authority alleged that the appellant had availed and utilized CENVAT credit improperly based on inadequate documentation, violating Rule 9 and Rule 11(2) of the CENVAT Credit Rules, 2004. The authority confirmed the demand of the wrongly availed amount along with interest and penalty. However, the Tribunal found that the appellant had rectified the situation by paying the duty in cash and was entitled to recredit the amount in their CENVAT account.

Confirmation of demand, interest, and penalty by the original authority:
The original authority confirmed the demand of the wrongly availed CENVAT credit amount, along with interest under Rule 14 of the CCR and a penalty under Rule 15(1) of the CCR. This decision was based on the alleged improper availing of the credit by the appellant.

Rejection of appeal by the Commissioner (Appeals):
The Commissioner (Appeals) rejected the appeal filed by the appellant against the original authority's decision. The appellant contended that the impugned order did not consider the facts and the law properly, leading to an incorrect finding regarding the recrediting of the CENVAT credit.

Legal sustainability of the impugned order:
After considering submissions from both parties, the Tribunal found that the impugned order denying the recredit to the appellant was not sustainable in law. The Tribunal ruled in favor of the appellant, citing a similar precedent where recredit was allowed when duty was paid twice, once through CENVAT credit and once in cash, as in the present case. The Tribunal set aside the impugned order and allowed the appeal of the appellant.

(Order was pronounced in Open Court on 15/07/2019)