2013 (11) TMI 1022 - AT - Central Excise

Mode of application of Refund Waiver of Pre-deposit - Whether the appellant should have applied for refund under the appropriate provisions of the Central Excise Act or they could take suo moto credit of this duty Held that - Relying upon BDH INDUSTRIES LTD. Versus COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I 2008 (7) TMI 78 - CESTAT MUMBAI - this is not case where duty was paid by mistake on the same goods more than once - suo moto credit of duty paid through cenvat credit is not permissible - the appellant have not been able to establish prima facie case in their favour and as such - Appellant directed to deposit 50% of the amount as pre-deposit Upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
- Whether the appellant is entitled to re-credit of duty paid on escalation amount without applying for a refund under the Central Excise Act?
- Whether the appellant has a strong prima facie case to waive the pre-deposit requirement of cenvat credit demand, interest, and penalty for the appeal?

Analysis:

Issue 1:
The appellant, a manufacturer of steel tubes, supplied goods to an automobile manufacturer and raised prices due to increased input costs. They issued supplementary invoices for the escalation amount, on which duty was paid through cenvat credit. However, the customers refused to pay the escalated amount, leading the appellant to cancel the supplementary invoices and not recover the amount or duty from the customers. The appellant then unilaterally re-credited the duty amount without applying for a refund. The Department objected, leading to a demand for cenvat credit repayment, interest, and penalty. The appellant argued that duty cannot be charged twice, citing precedents where suo moto credit was allowed for mistakenly paid duty. The Tribunal noted that the duty was not paid by mistake twice on the same goods. The judgment in BDH Industries case was considered applicable, where suo moto credit of duty paid was not allowed. Consequently, the appellant failed to establish a prima facie case, and they were directed to deposit 50% of the disputed amount within eight weeks.

Issue 2:
The appellant contended that they were entitled to re-credit as the customers did not pay the escalated amount, leading to the cancellation of the supplementary invoices. They sought a waiver of the pre-deposit requirement based on a strong prima facie case. The Department argued against the waiver, stating that the duty was paid on the escalation amount, which the appellant sought to recover from the customers. The Department emphasized that if a refund was due, the appellant should apply under Section 11B of the Central Excise Act. The Tribunal found that the appellant's case did not warrant total waiver. The appellant was directed to deposit 50% of the disputed amount, with the remaining pre-deposit requirement waived upon compliance. The recovery was stayed pending appeal disposal.

In conclusion, the judgment highlighted the importance of following proper procedures for duty refunds and clarified that suo moto credit may not be permissible in all cases, especially where duty was not mistakenly paid twice on the same goods. The appellant was directed to comply with the deposit requirement while the appeal process continued.