2005 (2) TMI 305 - AT - Central Excise

Summary

Issues:
1. Duty payment through Cenvat Account beyond the prescribed period of 90 days under Rule 156B of the Central Excise Rules, 1944.
2. Disallowance of credit by the Department and demand for the amount paid beyond 90 days.
3. Applicability of Rule 156B and the requirement for permission to take recredit.

Analysis:

1. The case involved the appellants, manufacturers of textile machinery, supplying products to 100% EOUs without payment of duty against CT-3 certificates. The issue arose when some rewarehousing certificates were received beyond the 90-day period prescribed under Rule 156B of the Central Excise Rules, 1944. The appellants paid the applicable duty through debits in the Cenvat Account and requested permission to take recredit upon receipt of rewarehousing certificates.

2. Both the original authority and the first appellate authority upheld the Department's proposal to disallow the credit and demanded the amount paid beyond 90 days from the assessee. The appellants contested this proposal, arguing that the Department should not disallow the credit after having slept over their request for permission to take recredit. The appellants referred to relevant case laws to support their argument.

3. The Tribunal analyzed Rule 156B, which required the consignor to pay duty by debit in the account-current if the rewarehousing certificate was not received within 90 days. The proviso allowed for a refund of duty if proof of rewarehousing was produced to the satisfaction of the proper officer. In this case, the duty payment was made from the Cenvat Account instead of the PLA, but the Department did not object to this procedure. The Tribunal noted that the Department tacitly allowed the appellants to proceed in this manner and did not raise a demand of duty under Section 11A of the Central Excise Act.

4. The Tribunal found that the Department's direction to reverse the credits in question was not justified. Citing the decision in Indo-American Electricals case, where denial of credit based on non-taking of permission was set aside, the Tribunal allowed the appeal. It concluded that the Department could not now insist on a refund claim after accepting the duty payments and allowing the recredit of amounts in the Cenvat Account.