2024 (11) TMI 467 - AT - Central Excise

Recovery of CENVAT Credit under Section 11A of Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules, 2004 - requirement to file application under Section 11B of Central Excise Act, 1944 for refund of debited cenvat credit - HELD THAT - The appellant had paid appropriate central excise duty on goods cleared by them from 01.03.2005 to 12.05.2005 and after six months of the payment of the appropriate duty, officers of the Department of Revenue through oral direction on 21.01.2006 made the appellant debit Rs.5,48,144/- in their cenvat account. The said debit was not assessed to duty through any proceedings. Therefore, the appellant had taken suo moto credit of the said amount. In the present case, it is noted that the amount debited in cenvat account by the appellant at the instance of officers of Department of Revenue was not adjudicated upon, was not assessed to duty nor was appropriated. It is further noted that sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2004 provides for manner of utilization of cenvat credit. As per the said provisions, cenvat credit can be utilized for payment of any duty of excise on final product, or on removal of partially processed goods, or on removal of capital goods as such, or for payment of service tax. The debit involved in the present appeal was not in respect of any of such requirements as provided under sub-rule (4) of Rule 3 of Cenvat Credit Rules. The present appellant was eligible to take suo moto cenvat credit of Rs.5,48,144/- and there was no need for them to file application for refund under Section 11B of Central Excise Act, 1944. The impugned order is set aside - appeal allowed.

Summary

Issues:
- Admissibility of cenvat credit debited by the appellant
- Requirement to file application for refund under Section 11B of Central Excise Act, 1944

Analysis:
1. The case involved the appellant, a manufacturer of cane sugar, who cleared sugar by paying appropriate central excise duty. Subsequently, the Department of Revenue informed the appellant of an increase in duty and required them to pay a differential duty amounting to Rs. 5,48,144/-. The appellant complied with this directive by debiting the amount in their cenvat account. However, the appellant later claimed that there was no increase in duty and sought to take credit of the debited amount. This led to a show cause notice for recovery of the debited amount under Section 11A of the Central Excise Act, 1944.

2. The appellant argued that the amount was debited under the Revenue's direction without proper assessment or confirmation as duty. They cited a ruling by the Hon'ble Rajasthan High Court to support their claim that excess cenvat credit can be taken by the manufacturer without the need for a refund application under Section 11B of the Act. The appellant emphasized that the debit was not part of any assessment process, including self-assessment.

3. The Revenue, on the other hand, relied on decisions of the Tribunal to support their position. The Tribunal carefully considered the arguments and noted that the appellant had paid the appropriate duty initially and was directed to debit the additional amount without formal assessment. The Tribunal referenced the Rajasthan High Court ruling, which allowed manufacturers to take suo moto credit of debited cenvat amounts, especially when not assessed or appropriated as duty.

4. Ultimately, the Tribunal found in favor of the appellant, stating that the debited cenvat credit was eligible for suo moto credit as per the Rajasthan High Court ruling. The Tribunal held that the appellant was not required to file a refund application under Section 11B of the Act. Therefore, the impugned order was set aside, and the appeal was allowed.

5. The judgment highlighted the importance of proper assessment and utilization of cenvat credit, emphasizing that in cases where debited amounts are not assessed or appropriated as duty, manufacturers may be entitled to take suo moto credit. The ruling by the Hon'ble Rajasthan High Court served as a guiding precedent in determining the admissibility of cenvat credit in such circumstances.