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2018 (11) TMI 612 - AT - Central ExciseQuantum of exemption under N/N. 56/2002-CE - CENVAT Credit availed while availing area based exemption under said notification - Department has alleged that the appellant by showing inflated production have received higher quantum of exemption in form of refund - Applicability of Section 11A of the Central Excise Act, 1944 - assessment of refund claim not challenged - validity of issuance of SCN u/s 11AC - Held that - The self credit of refund taken by the appellant have been sanctioned by the authorities below, therefore, without challenging the same, the show cause notice cannot be issued to the appellant under Section 11AC of the Act in terms of the decision of the Hon ble High Court of Gauhati in the case of Jellapore Tea Estate 2011 (3) TMI 11 - GAUHATI HIGH COURT - SCN not valid. Self credit taken where no duty is payable - Held that - The said issue has been settled by this Tribunal in the case of Jindal drugs Ltd. 2018 (5) TMI 379 - CESTAT CHANDIGARH (LB) wherein it has been held that whether the appellant was not liable to pay duty, therefore, the provisions of Section 11-A of the Central Excise Act are not applicable as it is not a case of short payment of duty, non-payment of duty or erroneously refund of duty - SCN issued u/s 11A not sustainable. Denial of CENVAT Credit on the basis of the test report of inputs - Held that - It is admitted by the Revenue that the appellant has received the inputs and in terms of Rule 3 of the Cenvat Credit Rules, 2004, the asseesse is entitled to take cenvat credit of duty paid on inputs. It is in material whether the inputs are as per test report or not - Credit allowed. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether without challenging the assessment of refund claim, can Revenue issue show cause notice under Section 11AC of the Act or not? 2. In a case where no duty is payable by the appellant and the appellant have taken self-credit of the same, whether the provisions of Section 11AC of the Act are applicable or not? 3. Whether cenvat credit can be denied on the basis of the test report of inputs or not? Issue-wise Detailed Analysis: Issue No. 1: Whether without challenging the assessment of refund claim, can Revenue issue show cause notice under Section 11AC of the Act or not? The Tribunal referred to the case of CCE, Shillong Vs. Jellapore Tea Estate (2011 (268) ELT 14(Gau)), where the Hon’ble High Court observed that Section 11A of the Central Excise Act, 1944, allows recovery of duties not levied, paid, short-levied, or erroneously refunded. However, this section is applicable only if the non-levy, non-payment, short-levy, or erroneous refund is based on any approval, acceptance, or assessment relating to the rate of duty or valuation of excisable goods under the Act. In the present case, the self-credit of refund taken by the appellant was sanctioned by the authorities, and without challenging this sanction, the show cause notice under Section 11AC cannot be issued. The Tribunal found that the decision in Micromax Informatics Ltd. (2016 (335) ELT 446 (Tri. Del.)) does not apply since there was no assessment order in that case, unlike the present case where refunds were sanctioned. Issue No. 2: In a case where no duty is payable by the appellant and the appellant have taken self-credit of the same, whether the provisions of Section 11AC of the Act are applicable or not? The Tribunal cited the case of Jindal Drugs Ltd. (Final Order No. A/61994/2018), concluding that if no duty is payable by the appellant, the provisions of Section 11A of the Central Excise Act are not applicable. This is because it is not a case of short payment, non-payment, or erroneous refund of duty. Therefore, the show cause notice issued under Section 11A is not sustainable. Issue No. 3: Whether cenvat credit can be denied on the basis of the test report of inputs or not? The Tribunal noted that it is admitted by the Revenue that the appellant received the inputs. According to Rule 3 of the Cenvat Credit Rules, 2004, the assessee is entitled to take cenvat credit of duty paid on inputs, regardless of whether the inputs conform to the test report. The fact that the appellant used these inputs to manufacture the final product substantiates their entitlement to cenvat credit. Therefore, denying cenvat credit on the basis of the test report is not justified. Conclusion: The Tribunal found no merit in the impugned order and set it aside. The appeal was allowed with consequential relief, if any.
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