2012 (7) TMI 444 - AT - Central Excise

Cenvat credit suo motu credit on the amount paid by assessee erroneously earlier Held that - Any excess payment made to the Department ought to be claimed by filing a refund claim as prescribed under Section 11B of the Central Excise Act - suo motu credit of the amount erroneously paid is not authorized under the Central Excise Act and Rules made thereunder - suo motu credit availed by the appellant is inadmissible to them Penalty Held that - Commr. has erred in imposing penalty without issuing them any notice as required under Section 35A (3) of the Central Excise Act and also erred in not mentioning the specific provision under which penalty of Rs.10,000/- imposed - penalty imposed on the appellant by the Ld.Commr. (Appeal) is set aside - Appeal partly allowed.

Summary

Issues:
- Appeal against order in appeal No. 15/Kol-V/2011 dated- 31.01.2011 regarding excisable finished products availing exemption under Notification No. 108/95-CE Dated-28/08/1995.
- Dispute over availing suo motu credit of Rs.4,79,837/- for erroneously paid amount under Rule 6 of Cenvat Credit Rules, 2004.
- Imposition of penalty of Rs.10,000/- by Ld. Commr. (Appeals) without issuing requisite notice.

Analysis:
1. The appellant, engaged in manufacturing, availed exemption under Notification No. 108/95-CE for excisable finished products. They paid 10% of the price of goods, later realizing the error, took suo motu credit of Rs.4,79,837/- in their PLA account. A show cause notice was issued for recovery under Section 11A of Central Excise Act. The Revenue appealed against the dropping of proceedings, leading to the imposition of penalty by Ld. Commr. (Appeals).

2. The appellant argued that they are entitled to take suo-motu credit due to a mistake in payment, citing legal principles. They contested the penalty, claiming lack of notice and clarity on penalty imposition. The Revenue contended that the issue of suo motu credit has been settled by a Larger Bench judgment, making previous judgments obsolete. They emphasized the need for a refund claim under Section 11B of the Central Excise Act.

3. The Tribunal found that the appellant wrongly paid the amount under Cenvat Credit Rules and took suo motu credit without notifying the Department or filing a refund claim. Referring to the BDH Industries case, the Tribunal clarified that suo motu credit without proper sanction is not authorized. While rejecting the appellant's claim for credit, the Tribunal agreed that the penalty imposition lacked proper procedure and clarity on the applicable provision.

4. The judgment highlighted the necessity of following statutory procedures for claiming refunds and emphasized the inadmissibility of suo motu credit without proper authorization. The penalty imposed without due process was set aside, partially allowing the appeal. The Tribunal upheld the requirement of filing refund claims under Section 11B and underscored the importance of following legal provisions for duty refunds.