2017 (2) TMI 102 - AT - Central Excise

Re-credit of duty from cenvat account - Rule 8 (3A) of Central Excise Rules, 2002 - requirement of payment of duty in cash during default period - the duty was paid twice from cenvat credit and second time from PLA on insistance of the department - Held that - the appellant have not taken suo moto credit on their own but they made number of request by writing letter to the department regarding re-credit of amount in the cenvat account but the department instead of deciding the re-credit they have issued show cause notice and denied the re-credit which is absolutely illegal and incorrect. Even if it is accepted that refund claim should have been filed, when the appellant have made request in writing for re-credit in the cenvat account, the same can be disposed of considering the refund claim of the appellant but instead of disposing request of re-credit both the lower authority has passed orders for recovery of the re-credit amount which is not legal and proper - re-credit of the amount by the appellant is correct and the same cannot be recovered. Unjust enrichment - Held that - the duty was paid twice on the same clearances however the duty passed on is only one time duty paid on the clearances, therefore the unjust enrichment does not apply. Moreover, the amount paid from Cenvat account has not been considered by the department as excise duty that is a reason they asked to pay in cash, which was complied by the appellant - no issue of unjust enrichment arises. The appellant has correctly re-credited the cenvat amount, therefore the impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Duty payment default under Rule 8 (3A) of Central Excise Rules, 2002
- Re-credit of duty paid from Cenvat account
- Requirement of filing a refund claim for re-credit
- Legitimacy of re-credit without prior approval
- Unjust enrichment in the case of re-credit

Analysis:

Issue 1: Duty Payment Default
The appellant defaulted in monthly duty payment as required under Rule 8 (3A) of Central Excise Rules, 2002, during which they paid duty from the Cenvat account. The department insisted that duty during the default period should be paid in cash and on a consignment basis, not from Cenvat Credit.

Issue 2: Re-Credit of Duty Paid
The appellant paid the entire duty in cash, which was earlier paid from the Cenvat account. They requested re-credit of the payment made in the Cenvat account, as the same amount was paid again in cash. Despite multiple requests for re-credit, the department issued a show cause notice proposing recovery of the credit taken suo moto along with interest and penalty.

Issue 3: Requirement of Filing Refund Claim
The lower authorities ordered for recovery of the re-credit amount, stating that the appellant should have filed a refund claim. The appellant argued that no refund claim was necessary as the re-credited amount was from the Cenvat credit, which does not require prior approval.

Issue 4: Legitimacy of Re-Credit
The appellant contended that the duty paid from Cenvat became eligible for re-credit in the Cenvat account as they had paid duty twice on the same clearances, complying with the department's instructions. The Tribunal and High Court have passed judgments supporting the permissibility of re-credit in such cases.

Issue 5: Unjust Enrichment
Regarding unjust enrichment, the appellant argued that as the duty was paid twice on the same clearances, but only one-time duty was applicable, unjust enrichment did not apply. The department's requirement to pay in cash instead of considering the amount from the Cenvat account also negated the unjust enrichment issue.

In the final judgment, the Tribunal held that the appellant was entitled to re-credit the duty paid from the Cenvat account, as they had paid in cash complying with the department's instructions. The lower authorities' denial of re-credit and orders for recovery were deemed illegal and incorrect. The Tribunal found no reason why the appellant should not be entitled to re-credit, especially after making multiple written requests. The judgments cited by the appellant's counsel supported the appellant's case. The Tribunal set aside the impugned order, allowing the appeal.