2016 (11) TMI 274 - AT - Central Excise

Suo-motu credit of the amount paid - eligibility to avail the Cenvat credit/recredit - Held that - We find that the adjudicating authority has come to a correct conclusion inasmuch, the findings of the fact of adjudicating authority are not disputed i.e. the demand of the duty on the respondent has been set aside by the adjudicating authority and upheld by the Tribunal. We also note that the amount paid by the respondent is under protest by a debit in Cenvat account. Adjudicating authority has correctly relied upon the various case laws as decided by the Tribunal, that in this factual position, there cannot be a dispute as to eligibility to avail the Cenvat credit/recredit of the said amount in their Cenvat account. We find that the ratio of the judgement of the Hon ble High Court of Karnataka in the case of Motorola India 2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE will directly cover the issue in favour of the respondent.

Summary

Issues:
Revenue's grievance against dropping proceedings, Availing suo-motu Cenvat credit, Interpretation of Cenvat credit Rules 2004 and Central Excise Act 1944, Legal authority for availing credit, Settlement of duty demand, Payment made under protest, Precedents supporting respondent's position.

Analysis:
The appeal was filed by the revenue challenging the dropping of proceedings against the respondent based on a show cause notice. The revenue contended that the adjudicating authority incorrectly dropped the proceedings initiated against the respondent. The respondent, on the other hand, had availed suo-motu Cenvat credit after paying an amount under protest following directions from officers during investigations. The revenue argued that there are no provisions allowing for the availing of suo-motu credit under the Cenvat credit Rules 2004 and the Central Excise Act 1944.

The respondent's counsel argued that the duty demand issue was settled in their favor by a Tribunal decision, making the amount paid under protest a sum retained by the government without legal authority. The respondent had debited the amount in the Cenvat account and availed the credit upon receiving a favorable order. The counsel cited legal precedents, including a judgment from the Hon'ble High Court of Karnataka and a decision by the Tribunal in a similar case, to support their position.

Upon review of the records, it was found that the adjudicating authority's decision to drop the demand of duty against the respondent was correct and had been upheld by the Tribunal. The amount paid by the respondent under protest through a debit in the Cenvat account was considered eligible for credit. The Tribunal referred to relevant case laws, including the judgment of the Hon'ble High Court of Karnataka and a previous decision involving a similar issue, to support the conclusion that the respondent was entitled to avail the Cenvat credit. The impugned order was upheld, and the appeal by the revenue was rejected based on the authoritative judicial pronouncements and the factual circumstances of the case.