2017 (7) TMI 930 - AT - Central Excise

Large Taxpayer Unit - Suo moto availment of CENVAT credit - Held that - it is not the CENVAT credit which was availed by the appellant suo moto rather the appellant made adjustment for the excess duty which was paid by him for the month of November 2006 to February 2007 and by clerical mistake he has paid the duty twice and made the self-adjustment after realizing his mistake which is permitted in terms of Rule 12BB applicable to LTU - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order upholding Order-in-Original but setting aside penalty under Section 11AC of the Central Excise Act.
- Availment of credit without a document evidencing payment of duty.
- Reversal of differential duty amount and raising supplementary invoices.
- Allegation of taking suo moto credit.
- Interpretation of Rule 12BB of the Central Excise Rules 2002.
- Applicability of decisions in BDH Industries Ltd. case and M/s. Lark Wires and Infotech Ltd. case.
- Correctness of impugned order and permissibility of self-adjustment under Rule 12BB.

Analysis:
The appeal was filed against the order upholding the Order-in-Original but setting aside the penalty under Section 11AC of the Central Excise Act. The appellant, engaged in the manufacture of alternators, had availed credit without a document evidencing payment of duty. Upon audit, it was found that there was a short-payment of duty, which was rectified by reversing the amount and raising supplementary invoices. The appellant argued that the duty was paid twice due to a clerical error, leading to the availing of credit, not suo moto, in their CENVAT account. The appellant contended that the impugned order did not consider the facts correctly and relied on Rule 12BB applicable to Large Taxpayers Unit (LTU) for self-adjustment. The appellant cited the decision in M/s. Lark Wires and Infotech Ltd. case to support their argument that the adjustment made was permissible without filing a refund claim.

After hearing both parties and examining the material, the Judicial Member found that the appellant had not availed CENVAT credit suo moto but had made an adjustment for the excess duty paid due to a clerical mistake. The self-adjustment was made in accordance with Rule 12BB applicable to LTU. The Judicial Member disagreed with the Revenue's allegation of the appellant taking suo moto credit and found the impugned order unsustainable in law. Relying on the decision in M/s. Lark Wires and Infotech Ltd. case, the Judicial Member allowed the appeal, setting aside the impugned order and providing consequential relief, if any. The judgment emphasized the permissibility of self-adjustment under Rule 12BB and distinguished the case from the decision in BDH Industries Ltd. case, highlighting the special privilege provided to LTUs under the Central Excise Rules 2002.

In conclusion, the judgment clarified the distinction between availing CENVAT credit suo moto and making a permissible adjustment for excess duty paid, emphasizing the applicability of Rule 12BB to LTUs. The analysis highlighted the importance of correct interpretation of rules and regulations in excise matters, ensuring that procedural requirements are met while allowing for legitimate adjustments in cases of clerical errors.