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2024 (8) TMI 1273 - AT - Central ExciseWrongful availment and utilization of CENVAT Credit representing Additional Duty of Customs and CVD on imported goods in the month of September 2011 - contravention of Rule 3(4) of the CENVAT Credit Rules, 2004 and Para 2B of Notification No. 20/2007-C.E. dated 25.04.2007. HELD THAT - The Respondent has received capital goods in four bills of entry and they had taken the credit of CVD on the dates on which the goods were received. However, due to ignorance, they did not take the credit of the additional duty of customs, and when they came to know that such credit was admissible, they took credit of the entire amount in the month of September 2011. Rule 4(2)(a) of the CENVAT Credit Rules, 2004 prescribes the availability of CENVAT Credit on capital goods and it stipulates that CENVAT Credit in respect of capital goods shall be taken only for an amount not exceeding 50% of duty; as per Rule 4(2)(b) of these Rules, the balance amount of credit may be taken in any subsequent financial year. In terms of Rule 4(2)(a) of these Rules, in respect of capital goods received at any point of time in a given financial year, the CENVAT credit shall be taken only for an amount not exceeding 50% of duty paid on such capital goods in the same financial year - there are no provision under the CENVAT Credit Rules, 2004 which debars a manufacturer from taking the credit if by some reason they fail to avail the credit immediately on receipt of the capital goods. Since the Respondent has availed the credit belatedly, they have utilised this credit for payment of duty after September 2011. Thus, they got less refund for the period after September 2011. Thus, there is no violation of condition 2B of the Notification No. 20/2007-C.E. dated 25.04.2007. Accordingly, there is no merit in the allegation of the Revenue that the Respondent has received excess refund during the period prior to September 2011. The alleged inadmissible credit taken in September 2011 has been proposed to be recovered under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 - the alleged credits taken by the Respondent belatedly were not in contravention of any of the provisions of CENVAT Credit Rules, 2004. the Credit availed can be considered as irregular only if it is taken in contravention of any of the provisions of CENVAT Credit Rules, 2004. Since the credit taken is not found irregular, Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 cannot be applied for recovery of the credit in this case. There are no merit in the submissions made by the Revenue that the Respondent has availed wrong/irregular credit - there are no merit in the contention of the Revenue that the Respondent has received excess refund as they have availed the credit belatedly - the ld. adjudicating authority has rightly passed the impugned order allowing the belated credit availed by the Respondent - the appeal filed by the Revenue is dismissed.
Issues: Alleged wrongful availing of CENVAT Credit under CENVAT Credit Rules, 2004 and Notification No. 20/2007-C.E. dated 25.04.2007.
Analysis: 1. The appeal was filed by the Revenue against the Order-in-Original passed by the Commissioner of Central Excise and Service Tax, Guwahati Commissionerate, alleging that the Respondent wrongly availed and utilized CENVAT Credit amounting to Rs.64,52,554/- representing Additional Duty of Customs and CVD on imported goods in September 2011, in contravention of CENVAT Credit Rules, 2004, and Notification No. 20/2007-C.E. dated 25.04.2007. 2. The Revenue contended that the Respondent belatedly availed the CENVAT Credit, leading to the payment of more duty from PLA instead of utilizing the available credit in the respective months, resulting in excess refund. A Show Cause Notice was issued proposing reversal of the CENVAT Credit along with interest and penalty. 3. The adjudicating authority dropped the demand, stating that the Respondent's belated availing of credit was due to ignorance and did not violate the CENVAT Credit Rules, 2004. The Revenue appealed, arguing non-compliance with the conditions of Notification No. 20/2007-C.E. dated 25.04.2007, specifically Clause 2B, which mandates utilizing the entire CENVAT credit available for payment of duty. 4. The Tribunal observed that the Respondent's belated availing of credit did not contravene the CENVAT Credit Rules, 2004, as there was no provision debarring a manufacturer from taking credit if not immediately availed. It was noted that the Respondent's payment of duty in cash from November 2010 to August 2011 and subsequent refund claims did not violate the notification's conditions. 5. The Tribunal held that the alleged excess refund due to belated credit availing was unfounded, as the Respondent's utilization of credit post-September 2011 resulted in reduced refunds. Rule 14 of CENVAT Credit Rules, 2004 and Section 11A of the Central Excise Act, 1944 were deemed inapplicable for credit recovery, as the availed credit was not irregular. The impugned order allowing the belated credit availed by the Respondent was upheld, dismissing the Revenue's appeal. 6. Consequently, the Tribunal dismissed the Revenue's appeal, finding no merit in the allegations of wrongful/irregular credit availing or excess refund receipt by the Respondent. The impugned order was upheld, and no interest or penalty was imposed due to the eligibility of the availed credit.
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