2019 (12) TMI 12 - AT - Central Excise

Suo-moto credit of duty paid - price revision clause - compounded levy scheme - the appellant was entitled for refund on pro-rata basis for reduction in the price, for the period from 13 April 2010 to 30 April 2010, as per 5th proviso to Rule 9 of Chewing Tobacco Un-manufactured Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010 - HELD THAT - The Chewing Tobacco Un-manufactured Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010 has explicitly provided that in case of revision of rate of duty, the department should itself refund the differential duty paid which is in excess of the revised rate. Proviso to Rule 9 clarifies that there is no need of filing any application. Department was duty bound to give refund by 20th day of the following month. Therefore, the appellant s action of taking suo-moto credit on 20 May 2010 is in accordance with the 5th proviso to Rule 9 of Chewing Tobacco Un-manufactured Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010 - there are no illegality or incorrect in taking suo-moto re-credit by the appellant. Therefore, the order inasmuch as for demand of differential duty and penalty, is set-aside. Appeal allowed - decided in favor of appellant.

Issues:
1. Entitlement to refund on pro-rata basis for revised duty rate.
2. Validity of appellant's action of taking suo-moto re-credit.
3. Rejection of refund claim by the Adjudicating Authority.

Analysis:

Issue 1: Entitlement to refund on pro-rata basis for revised duty rate
The case involved the appellant engaged in the manufacture of Chewing Tobacco paying duty as per specific rules. The appellant paid duty at a certain rate, which was later revised to a lower rate. The appellant claimed a refund for the period of the revised rate. The Tribunal examined the relevant rules and found that the department was obligated to refund the differential duty without the need for an application. The appellant's action of taking re-credit was deemed correct as per the proviso to Rule 9 of the applicable rules. Consequently, the Tribunal set aside the demand for the differential duty and penalty, allowing the appeal related to this issue.

Issue 2: Validity of appellant's action of taking suo-moto re-credit
The appellant had taken suo-moto re-credit due to the revision in the duty rate. The Tribunal analyzed the provisions of the rules, particularly the requirement for the department to refund the excess duty automatically. It was concluded that the appellant's action of taking re-credit was in accordance with the rules, as there was no requirement for filing an application for the refund. The Tribunal found no illegality in the appellant's action and allowed the appeal related to the demand of differential duty.

Issue 3: Rejection of refund claim by the Adjudicating Authority
The Adjudicating Authority had rejected the appellant's refund claim on the grounds that the appellant had already taken suo-moto credit. However, since the Tribunal found the appellant's action of taking re-credit to be correct and legal, the rejection of the refund claim was deemed unnecessary. The Tribunal held that the processing of the refund was merely to regularize the appellant's correct action of taking re-credit. Consequently, the appeal related to the rejection of the refund claim was also allowed.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, emphasizing the correctness of the appellant's actions in taking suo-moto re-credit and the entitlement to the refund as per the applicable rules.

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