2013 (5) TMI 185 - AT - Central Excise

Refund of excess duty paid - as per assessee excess payment has happened due to some clerical mistakes which they detected subsequent to reversal of credit and this clerical mistakes were corrected in the credit account - Held that - It is not coming out clearly as to how the excess payment is identified and reversed. It is also not clear whether the duty payment was passed on to the buyers of the products and whether any unjust enrichment would be involved if such excess payment gets refunded. Under Central Excise Law, refund of excess duty has to go through very strict scrutiny as laid down in Section 11B and that cannot be circumvented by taking suo motu credit. Therefore, no merit in the appeal filed by the appellant. However, the appellant s request for lenient approach in the matter of penalty is considered and the penalty is reduced to Rs.5000/-. Except for partial relief in penalty, the appeal is rejected.

Issues:
1. Availing Cenvat credit without proper documentation.
2. Refund procedure under Section 11B.
3. Clerical mistakes leading to excess payment.
4. Justification for penalty reduction.

Issue 1: Availing Cenvat credit without proper documentation
The appellant had taken suo motu credits in the Cenvat credit account without providing the required documents specified under Rule 9 of the Central Excise Rules. The Range officer highlighted this issue and instructed the appellant to follow the refund procedure under Section 11B if the credit related to any excess payment. The appellant did not respond to the officer's letter, leading to a show cause notice for the recovery of the credits taken. The adjudicating authority confirmed the demand for Rs. 89,209 along with interest and penalty, which was later reduced to Rs. 18,000 on appeal.

Issue 2: Refund procedure under Section 11B
The appellant claimed that the excess payment was due to clerical errors, which were rectified after the credit reversal. However, no refund claims were filed to recover the excess excise duty demanded. The appellant also took the credits well beyond the time limit specified in Section 11B for claiming refunds of excess duty paid. The Tribunal emphasized that under Central Excise Law, refunding excess duty requires strict scrutiny as per Section 11B and cannot be bypassed by merely taking suo motu credit.

Issue 3: Clerical mistakes leading to excess payment
The appellant argued that clerical errors caused the excess payment, which was rectified upon detecting the mistakes and reversing the credit. However, the Tribunal found it unclear how the excess payment was identified and reversed. Furthermore, it was not established whether the duty payment was passed on to the buyers of the products or if unjust enrichment would occur if the excess payment was refunded. These uncertainties raised doubts about the justification for claiming the excess payment.

Issue 4: Justification for penalty reduction
The Tribunal acknowledged the appellant's request for leniency regarding the penalty imposed. Despite reducing the penalty to Rs. 5,000, the Tribunal rejected the appeal, emphasizing that the strict procedures outlined in Section 11B for refunding excess duty cannot be circumvented by taking suo motu credit. The Tribunal found no merit in the appellant's appeal, except for the partial relief granted in reducing the penalty. Therefore, the appeal was dismissed, and the stay petition was disposed of accordingly.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the key issues raised, the arguments presented by the appellant, and the Tribunal's decision based on the legal provisions and factual circumstances of the case.

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