2017 (9) TMI 614 - AT - Central Excise

Demand of interest - credit reversed by the appellant - The appellants have argued that in terms of Section 11B clause 11 (ce) of the explanation, the appellants are required to pay interest only from the date of the order of JS (RA) and not from the date when they had taken the credit - Held that - Section 11AB (1) of the Act mandates to pay interest in addition to the duty erro0neously refunded from the date of sanction of such erroneous refund till the date of payment of such duty. The unambiguous wordings of the aforementioned Section 11AB (1) leave no scope for interpretation - interest upheld - appeal dismissed. CENVAT credit - credit availed as per SION norms in respect of export made - Held that - The Cenvat Credit Rules permits availment of credit only in specific circumstances. It is not open to the appellant to take credit on estimated basis. Moreover, in the instant case, there is no basis for the appellant to avail the Cenvat Credit. The appellant had sought to take credit solely on the ground that the final goods manufactured out of the same were exported - The exporter cannot, on his own devise a new method to avail credit which not prescribed under the law - appeal dismissed. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Demand of interest on credit reversed by the appellant
2. Availment of Cenvat Credit as per SION norms in respect of export made

Analysis:

Issue 1: Demand of interest on credit reversed by the appellant
The appellant filed appeals against the demand of interest for the period when they took credit until its reversal. The original adjudicating authority and first appellate authority allowed the appellant to take back the credit of the duty paid as Cenvat Credit, which was later reversed by JS (RA). The question before the Tribunal was whether interest on this reversal should be demanded from the date the appellant took credit or from the date of JS (RA) order. The Tribunal referred to the decision in Ind-Swift Laboratories Ltd. case, holding that interest on wrongly taken credit can be demanded from the date of availment. The appellants argued based on Section 11B but the provision relating to demand under Section 11AB was deemed applicable. The Tribunal upheld the demand of interest based on Section 11AB, dismissing the appeal.

Issue 2: Availment of Cenvat Credit as per SION norms in respect of export made
The second appeal related to the suo moto availment of credit on an estimated basis by the appellant for exports where the rebate claim was rejected. The Revenue challenged this availment, arguing that the appellant cannot take credit on an estimated basis without proper documentation as per Cenvat Credit Rules. The appellant claimed they were entitled to the credit as no taxes can be exported, relying on precedents. However, the Tribunal held that the appellant cannot devise a new method to avail credit not prescribed under the law. The Tribunal dismissed the appeal, stating that there was no merit in the appellant's argument regarding the availment of Cenvat Credit without proper documents as per SION norms.

In conclusion, the Tribunal upheld the demand of interest on the reversed credit based on Section 11AB and dismissed the appeal related to the availment of Cenvat Credit on an estimated basis without proper documentation as per SION norms.