2024 (5) TMI 775 - AT - Central Excise

Refund of CENVAT Credit alongwith interest from the date the amount was debited/pre-deposited till the date it was refunded - suo moto re-credit of amount in question in the CENVAT account - HELD THAT - Although the Appellant re-credited the amount of Rs. 41, 28, 106 debited on 12.11.2014 in their credit account on 31.05.2016 yet they again debited this amount in two installments i.e. Rs. 10, 50, 000 was debited vide RG-23A Pt-Il entry No. 61 dt.31.12.2016 and the remaining amount of Rs. 30, 78, 105 was debited vide Entry No. 78 dated 31.01.2017 of RG-23A Pt-II at the insistence of the department. The department collected interest of Rs.1, 20, 508 paid by the Appellant through challan/GAR No. 50189 dated 10.03.2017. This fact is also recorded in Order-In-Original dated 28.09.2020. Thus the department collected/charged interest from the Appellant for the period during which the Appellant retained the amount. The department compensated it by charging interest as if the amount remained with the department for entire period of 12.11.214 to 17.06.2021. In such a situation the Appellant are entitled to get interest on the amount of Rs. 41, 28, 106 for the whole period of 12.11.2014 to 17.06.2021. Appeal allowed.

Summary

Issues involved:
The issues involved in this case are the appropriation of CENVAT credit, recovery of Central Excise Duty, rejection of refund claim, interest calculation, and legal obligation for refund with interest.

Appropriation of CENVAT credit and Recovery of Central Excise Duty:
The appellant's unit faced a shortage of stock of inputs and spare parts of finished goods due to security and safety reasons, which were shifted to another place under protest. The appellant reversed the amounts and deposited them. A show cause notice was issued for demanding CENVAT credit and recovering Central Excise Duty, which was adjudicated confirming the appropriation and imposing penalties. The appellant's appeal was allowed by the Ld. Commissioner (Appeals), leading to a refund claim being filed. The refund claim was rejected on the grounds of improper credit utilization. However, the appeal against the rejection was allowed by the Commissioner (Appeals), resulting in the refund application being filed again and eventually being sanctioned with interest, albeit with a short payment of interest.

Rejection of Refund Claim:
A refund claim was filed by the appellant for the amounts debited on a specific date. The claim was rejected by the Adjudicating Authority on the basis of improper credit utilization. However, the appeal against this rejection was allowed by the Commissioner (Appeals), resulting in the refund application being filed again and eventually being sanctioned with interest, albeit with a short payment of interest.

Interest Calculation and Legal Obligation for Refund with Interest:
The appellant contended that they were entitled to interest on the debited amount for the period it remained debited. The department had collected interest from the appellant for the period during which the amount was retained. The appellant argued that they should receive interest for the entire period from when the amount was debited until the refund. The Tribunal agreed with the appellant's argument, stating that the department had compensated by charging interest as if the amount remained with them for the entire period. Consequently, the appeal was allowed with consequential relief, granting the appellant interest on the debited amount for the entire period.