Amit Bhatt (Job) (28 Points)
21 April 2016Dear All,
We have exported goods to Nepal but POE of for same are not received within 180days due to political issue at Nepal Border. So we have debited duty on expiry of 180 days. Now we have received POE and submitted with Excise Dept.
Kidnly guide can we take recredit of the duty debite by us on expiry of 180 days? If there is any rules or notification for that please provide.
Venkatanarayana GM
(Partner associate at Hiregange & Associates)
(1279 Points)
Replied 22 April 2016
Mr. Amit Bhat,
Filing of ARE - 1 is only a procedure lapse. Once, if you can prove that, the goods has been exported ,the benefit of excise duty should be available.
Now, you may have to request your juridiction superintendent for accepting POE copies.
You can alos avail cenvat credit which you have debited on basis of suo - moto credit.
Please see case law
2014 (302) E.L.T. 45 (Mad.)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Chitra Venkataraman and T.S. Sivagnanam, JJ.
ICMC CORPORATION LTD.
Versus
CESTAT, CHENNAI
Civil Miscellaneous Appeal No. 208 of 2013 and M.P. No. 1 of 2013, decided on 3-1-2014
Cenvat - Recredit - Suo motu credit of Cenvat reversed earlier - Process involved only an account entry reversal, no outflow of funds from the assessee - Filing of refund claim under Section 11B of Central Excise Act, 1944 not required - Rule 6(5) of Cenvat Credit Rules, 2004. - On the admitted fact, ` 3,21,308 represented the enumerated input services as given under Rule 6(5) ibid, no hesitation in accepting the plea of assessee that on a technical adjustment made, the question of unjust enrichment as a concept does not arise. [paras 13, 14, 15, 16, 17]
Refund - Unjust enrichment concept does not arise on a technical adjustment made - Section 11B of Central Excise Act, 1944. [paras 13, 16]
Appeal allowed
CASES CITED
Assistant Commissioner v. Indo-Nippon Chemicals Co. Ltd. — 2005 (186) E.L.T. A117 (S.C.) — Referred [Para 9]
Indo-Nippon Chemicals Co. Ltd. v. Union of India — 2005 (185) E.L.T. 19 (Guj.) — Referred [Para 9]
DEPARTMENTAL CLARIFICATION CITED
C.B.E. & C. Letter F. No. 1437/203/2007-CX.4, dated 1-10-2007 [Para 7]
REPRESENTED BY : Shri S. Jaikumar, for the Appellant.
Shri K. Mohana Murali, CGSC, for the Respondent.
[Judgment per : Chitra Venkataraman, J.]. - This Civil Miscellaneous Appeal has been preferred by the assessee as against the Final Order No. 260 of 2012, dated 15-3-2012 passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai Bench in Appeal No. E/254/2011 raising the following questions of law :
1. Whether the Tribunal is right in dismissing the appeal on the ground that the appellant ought to have filed an appeal against the earlier order dated 4-12-2007 of the first respondent for the purpose of claiming re-credit, when there is no dispute on the fact of appellant’s entitlement for the said credit as held by the third respondent and which has not been reviewed/appealed against by the second respondent?
2. Whether the Tribunal is right in dismissing the appeal on the above ground when the issue for decision before it was whether the appellant is right in taking suo motu re-credit or the appellant ought to have filed refund claim under Section 11B of the Central Excise Act, 1944 as proposed in the show cause notice dated 27-11-2008 issued by the third respondent?
3. Whether the Tribunal is right in not considering the various Tribunal judgments relied upon by the appellant wherein it has been categorically held that suo motu re-credit of credit reversed during proceedings are permissible and no refund claim under Section 11B of the Central Excise Act, 1944 is required?
4. Whether the Tribunal is right in holding that the right course of action for the appellant is to seek redressal in the higher judicial forum, if they are aggrieved by the earlier order when appellant’s entitlement for the said credit is not at all based on the said earlier order of the Tribunal but it is based on the provisions of Rule 6(5) ibid?
2. On going through the order passed by the Customs, Excise and Service Tax Appellate Tribunal, we find that the question that arise for consideration before this Court is as follows :
Whether the assessee was entitled to take credit to the tune of Rs. 3,21,308/- as per Rule 6(5) of the Central Excise Rules, 2004 in respect of those services specifically mentioned in the book, which was earlier reversed by the assessee?
3. The order now under challenge before this Court at the instance of the assessee is an off-shoot to the earlier round of appeal wherein, the Customs, Excise and Service Tax Appellate Tribunal set aside the demand of Rs. 1,29,09,031/- as against the assessee taking into account the reversal of the entire amount of credit taken on input services amounting to Rs. 5,38,796/-. The earlier appeal order was the subject matter of consideration before this Court in CMA No. 1962 of 2008 which, we have dismissed today taking note of the amendment brought forth under the Finance Act, 2010 to Section 73(2) through insertion of Rule 6(6) of Cenvat Credit Rules.
4. The facts herein is that the assessee took credit of Rs. 3,21,308/- on its own out of the reversed credit of Rs. 5,38,796/-, the assessee supported its course of action based on the specially listed services under Rule 6(5) of the Cenvat Credit Rules, 2004 and the said provision reads as under :
“Rule 6(5) : Notwithstanding anything contained in sub-rule (1), (2) and (3), credit of the whole of Service Tax paid on taxable service as specified in sub-clause (g), (p), (r ), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of Clause (105) of Section 65 of the Finance Act shall be allowed unless such services is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services.”
5. The assessee is engaged in the manufacture of both dutiable goods and exempted goods and was availing Cenvat credit on various input services. According to the assessee, it was entitled to take full credit of the Service Tax paid on those taxable services, specified in Rule 6(5) of the Cenvat Credit Rules, 2004.
6. According to the Revenue, since the refund had arisen on account of the reversal of the credit originally, the assessee should have filed refund application as required under Section 11B of the Central Excise Act instead of taking suo motu credit. A show cause notice was issued to the assessee calling upon it to show cause as to why a sum of Rs. 3,21,308/- being the ineligible Service Tax credit taken and utilized for payment of duty for clearance of their finished goods should not be demanded under Rule 14 of the Cenvat Credit Rules, 2004 read with Central Excise Act, 1944. Apart from this, the notice also alleged that the amount of Rs. 6,009/- and Rs. 8,328/- being the ineligible credit reversed should not be appropriated under Rule 14 of the Cenvat Credit Rules, 2004. The notice also proposed interest in terms of Rule 14 of the Cenvat Credit Rules, 2004 r/w Section 11AB of the Central Excise Act, 1944 and penalty under Rule 15 of the Cenvat Credit Rules, 2004 for contravening the provisions of the Act.
7. The assessee resisted the proceedings by quoting the clarificatory letter issued by the C.B.E. & C. vide Letter F. No. 1437/203/2007 CX.4, dated 1-10-2007 and contended that for taking a re-credit, there was no need for reversal of the said credit as the same being protected under Rule 6(5) of the Cenvat Credit Rules, 2004 and as clarified by the C.B.E. & C. Circular. The Adjudicating Authority however pointed out that it was not the case of the Revenue that the assessee was not entitled to the impugned Service Tax credit and that their only objection was that the assessee ought not to have taken credit suo motu without filing a refund petition. Quoting Section 11B of the Central Excise Act, 1944, the Adjudicating Authority pointed out that except for this provision, there was no other provision under the Central Excise Law for grant of refund much less a provision authorising the assessee to avail refund of duty suo motu without the permission of the Assistant Commissioner or Deputy Commissioner of Central Excise. In so holding, it confirmed the proposal of the Adjudicating Authority and demanded a sum of Rs. 3,21,308/- being the Cenvat credit on Service Tax taken suo motu by the assessee under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act. He also confirmed the proposal for levy of interest as well as imposition of penalty of Rs. 80,000/- under Rule 15 of the Cenvat Credit Rules, 2004 for irregular availment of the aforesaid credits in violation of Rule 3 of the Cenvat Credit Rules, 2004.
8. Aggrieved by this, the assessee went on appeal. The First Appellate Authority viewing that the action of the assessee in taking suo motu credit was not as per law held that the assessee was liable to pay interest. However on the penalty imposed, he reduced it to Rs. 10,000/-.
9. As regards the claim of the assessee that what was adjusted was only a credit available in the books of accounts and not a refund on payment of duty, the Commissioner held that all types of refund claim had to be filed under Section 11B of the Central Excise Act, 1944 and there could be no suo motu credit of any duty paid in excess or inadvertently to be taken by the assessee. In the circumstances, referring to the decision of the Gujarat High Court reported in 2005 (185) E.L.T. 19 [Indo-Nippon Chemicals Co. Ltd. v. Union of India] as upheld by the Apex Court in the decision reported in 2005 (186) E.L.T. A117 [Assistant Commissioner v. Indo-Nippon Chemicals Co. Ltd.], the Commissioner rejected the assessee’s appeal.
10. Aggrieved by this, the assessee went on further appeal before the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal held that when the assessee had contended in the earlier grounds of appeal that they were entitled for credit of part of the amount reversed earlier, they could not now take re-credit of the same without a specific relief having been granted to them by the Tribunal. It further pointed out that there was no finding by the Tribunal in the earlier round of litigation on the amount of Rs. 3,21,308/- to take suo motu credit, which was forming part of the sum of Rs. 5,38,796/-, which was reversed earlier by the assessee. The mere fact of the Tribunal allowing the appeal in the earlier round itself would not be a good ground for the assessee to take suo motu credit. In the circumstances, the Tribunal rejected the assessee’s appeal, as against which, the present appeal has been preferred by the assessee.
11. The assessee are manufacturers of Mono Cartons and Printed Paper Labels. Evidently, the cartons are subjected to excise duty and the printed paper labels are exempted from payment of duty vide Notification No. 10/2003-C.E., dated 1-3-2003. According to the Revenue, common inputs were utilized in the manufacture of exempted items as well as dutiable items. The allegation of the Revenue is that the assessee had not maintained a separate account in respect of input services. Thus for the period from September 2004 to February 2006, there was a demand of duty at Rs. 1,29,09,931/- being 10% of the value of exempted goods cleared during the period. Admittedly, the assessee reversed the entire input as service credit availed by them during this period and based on the reversal of the entry, in the order dated 4-12-2007 in E/Appeal No. 432/2007, the Customs, Excise and Service Tax Appellate Tribunal accepted the assessee’s case and set aside the order of adjudication. The Service Tax credit taken by the assessee, which was subsequently reversed represented the amount of Rs. 5,49,854/-. Consequent on the reversal of the entry, the assessee took Service Tax credit on Rs. 3,21,308/- in the Cenvat account on its own, without making a formal application. This was objected to by the Revenue by contending that the assessee should have filed a refund application as required under Section 11B of the Central Excise Act, 1944. Thus, according to the Revenue, the amount of Rs. 3,21,308/- being the ineligible Service Tax credit taken and utilized for payment of duty on the clearance of finished goods attracted once again duty under Rule 14 of the Cenvat Credit Rules, 2004 r/w Section 11A of the Central Excise Act, 1944. The assessee countered this by placing reliance on Rule 6(5) of the Cenvat Credit Rules, 2004 as clarified by the Board. According to the Revenue, it being one of accounted entry reversal alone, there being no factory outflow of funds as by way of payment of duty, the question of going by the provisions under Section 11B of the Central Excise Act, 1944 does not arise.
12. Section 11B of the Central Excise Act,1944 relates to claim for refund of duty, which reads as under :
(1) Any person claiming refund of any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the relevant date] [in such form and manner] as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in Section 12A as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from or paid by him and the incidence of such [duty and interest, if any. paid on such duty] had not been passed on by him to any other person :
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 (40 of 1991), such application shall be deemed to have been made under this sub-section as amended by the Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act :
[Provided further that] the limitation of [one year] shall not apply where any [duty and interest, if any, paid on such duty] has been paid under protest.
[(2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the whole or any part of the [duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund :
Provided that the amount of [duty of excise and interest, if any, paid on such duty] as determined by the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to -
(a) …
(b) …
(c) …
(d) …
(e) …
(f) …
……………”
The objection of the Revenue herein is that even for a reversal of an entry, the assessee should have followed Section 11B of the Central Excise Act, 1944 lest there would be unjust enrichment. Consequently, there could be no such thing as suo motu reversal, except through a petition made under Section 11B of the Central Excise Act, 1944.
13. We do not subscribe to the view expressed by the Revenue. Admittedly, the assessee originally availed the Cenvat credit on Service Tax for discharging its liability. However, for sound reasons, it reversed the credit. Strictly speaking, in this process, there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty. The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle, since, what is availed off by the assessee is only a credit on the duty paid on the services rendered. Further, the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004. as there is no dispute of the fact that a sum of Rs. 3,21,308/- available as Cenvat credit was in respect of input services, which are given under Rule 6(5) of the Cenvat Credit Rules, 2004. When that being the case, in respect of those services specifically mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 as it existed during the relevant period viz., 2004-2006 getting the reversal of the entry is in tune with its stand taken, which was accepted by the Tribunal in the earlier round of litigation.
14. We do not find any good ground to hold that it was a case of refund of duly falling under Section 11B of the Central Excise Act, 1944 and that the assessee was to comply with the provisions of Section 11B of the Act. The view of the Tribunal that the assessee should seek reversal in the appropriate judicial forum, if the assessee was aggrieved by the earlier order herein does not arise at all.
15. Even a cursory reading of the order of the Tribunal in the earlier round of litigation would show that it accepted the assessee’s case of suo motu reversal of the entry. That being the case, the subsequent conduct of the assessee for a follow up action on an amount of Rs. 3,21,308/-, which is only an account entry adjustment, technically speaking cannot be taken exception to either by Tribunal or for that matter by the Revenue. For this, we do not find any need for a finding to be given in the order of the Tribunal in the earlier round of litigation.
16. We do not for a moment deny the fact that a sum of Rs. 3,21,308/- for which suo motu credit was taken by the assessee was forming part of Rs. 5,38,796/-, which was earlier reversed by the assessee. On the admitted fact, Rs. 3,21,308/- represented the enumerated input services as given under Rule 6(5) of the Cenvat Credit Rules, 2004, we have no hesitation in accepting the plea of the assessee that on a technical adjustment made, the question of unjust enrichment as a concept does not arise at all for the assessee to go by Section 11B of the Central Excise Act, 1944.
17. In the circumstances, we set aside the order of the Tribunal and allow the appeal filed by the assessee and hold that legally speaking there is no impediment in the assessee taking suo motu credit of the sum of Rs. 3,21,308/-. In the light of the above, we allow the appeal.
18. We may also note that in ground (C) of the appeal grounds, the assessee had specifically pointed out that what they debited in the Cenvat Account was not at all made towards any duty payment, which would require a refund claim. The assessee made a specific claim that they had re-credited only the credit reversed on those services mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 and nothing beyond.
19. On this aspect, we specifically posed the question to learned counsel appearing for the assessee, who re-affirmed the same and given the fact that re-credit of the credit reverse was only in respect of those enumerated services under Rule 6(5) of the Cenvat Credit Rules, 2004 on which there is no dispute from the Revenue. We have no hesitation in accepting the assessee’s case.
20. In the result, we set aside the order passed by the Customs, Excise and Service Tax Appellate Tribunal and allow the assessee’s case. No costs. Consequently, the connected miscellaneous petition is closed.
2013 (291) E.L.T. 399 (Tri. - Ahmd.)
IN THE CESTAT, WEST ZONAL BENCH, AHMEDABAD
[COURT NO. II]
Shri M.V. Ravindran, Member (J)
BODAL CHEMICALS LTD.
Versus
COMMISSIONER OF C. EX., AHMEDABAD-I
Final Order No. A/10181/2013-WZB/AHD, dated 11-1-2013 in Appeal No. E/211/2011
Cenvat credit - Availment of - After initially taking it, reversal on direction of CERA audit officers on ground not examined by them - However, subsequently, on finding that impugned items could be considered as inputs, amount reversed re-credited by assessee - HELD : It was case of Revenue officers forcibly directing assessee to reverse correctly availed Cenvat credit - Hence, Revenue plea that suo motu refund of excess/twice paid duty could not be done without refund claim, rejected - Rule 3 of Cenvat Credit Rules, 2004. [paras 7, 8]
Cenvat credit - Inputs - Solvents, Master-coat, M.S. Bar, Angle, Beam, HR Coils etc. - Used in manufacture of vessels which were further utilized for manufacture of Dye Intermediates - HELD : Impugned items were inputs on which assessee was entitled to credit of duty paid - Rule 2(k) of Cenvat Credit Rules, 2004. [para 7]
Appeal allowed
CASES CITED
BDH Industries Ltd. v. Commissioner — 2008 (229) E.L.T. 364 (Tribunal-LB) — Referred [Para 5]
Lark Wires and Infotech Ltd. v. Commissioner — 2008 (231) E.L.T. 154 (Tribunal) — Followed [Paras 4, 8, 9]
Solaris Chemtech Ltd. v. Commissioner — 2008 (224) E.L.T. 333 (Tribunal) — Followed [Paras 4, 8]
REPRESENTED BY : Shri N.K. Tiwari, Consultant, for the Assessee.
Shri K.N. Joshi, AR, for the Revenue.
[Order]. - This appeal is directed against Order-in-Appeal No. 350/2010/ Ahd-I/CE/MM/Commr(A)/Ahd, dated 2-11-2010.
2. Brief facts of the case are that during the course of Audit, it was observed that the appellant had availed 50% Cenvat credit on capital goods during the year 2008-2009 and remaining 50% Cenvat credit in the year 2009-2010. The said Cenvat credit on capital goods so availed not covered as capital goods had been reversed along with interest by the appellant as pointed out during the CERA audit. The appellant had again re-credited the same in their Cenvat credit register which contravened the provisions of Rules 2(a)(A) and explanation-2 given after Rule 2(k) of the Cenvat Credit Rules, 2004. Therefore, a show cause notice proposes to recover Central Excise duty of Rs. 1,18,445/- under Section 11A of Central Excise Act, 1944 along with interest under Section 11AB of Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules, 2004 and penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Act on the appellant. The said show cause notice was adjudicated vide aforesaid impugned order by the Assistant Commissioner, Central Excise, Division-II, Ahmedabad-I and he has dropped the proceedings initiated against the appellant and regularized the Cenvat credit.
3. Aggrieved by such impugned order, Revenue filed an appeal before first appellate authority. First appellate authority, after considering the submissions made before her, reversed the Order-in-Original and confirmed the demand raised on the appellant.
4. Ld. Consultant appearing on behalf of the appellant would submit that the appellant had correctly taken the Cenvat credit on the items like Solvents, Master-coat, M.S. Bar, Angle, Beam, HR Coils etc. It is his submission that all these goods were used in the manufacture of vessels which are used by the appellant in the manufacture of Dyes Intermediates and the vessels are capital goods. It is his submission that initially on direction of CERA audit party, the appellant reversed the credit availed and interest was also paid on 15-4-2009. Subsequently, in the month of May 2009, he re-availed the credit as these were the inputs covered under invoices which are correctly classifiable as inputs. It is his submission that the first appellate authority has not considered these submissions in its proper perspective and had reversed the Order-in-Original. He would rely upon the decision of the Tribunal in the case of Lark Wires & Infotech Ltd. - 2008 (231) E.L.T. 154 (Tri.-Ahmd.) and Solaris Chemtech Ltd. - 2008 (224) E.L.T. 333 (Tri.-Bang.).
5. Ld. A.R. for the Department would rely upon the decision of Larger Bench in the case of BDH Industries Ltd. - 2008 (229) E.L.T. 364 (Tri.-LB), wherein it was held that suo motu refund of excess/twice paid duty cannot be done so and the assessee has to follow the proof of refund claim through the proper officers. He would reiterate the findings of the first appellate authority.
6. I have considered the submissions made at length and perused the records.
7. It is undisputed that the appellant herein had availed the Cenvat credit of the items like Solvents, Master-coat, M.S. Bar, Angle, Beam, HR Coils etc. It is also undisputed that these goods were in the manufacture of vessels which were further utilized for the manufacture of Dye Intermediates. It is undisputed that such items were received in the factory premises by the appellant and consumed in the factory premises. It is seen from the record that initially when the CERA audit officers directed the assessee to reverse the amount of Cenvat credit of Rs. 1,18,445/-, they did so, but subsequently finding that these items on which credit was availed, can also be considered as input as they have used the said inputs for fabrication of machinery which is used in the manufacture of Dye Intermediates, they recredited the amount reversed as per the direction of CERA audit officers.
8. I find strong force in the contentions raised by the ld. Consultant on behalf of the appellant. If an assessee has correctly availed the Cenvat credit and is directed to reverse the same by audit officers on the ground which is not examined by them, it would amount to forcibly directing the appellant to reverse the Cenvat credit. I find that the contentions of the ld. Consultant that the items on which credit was availed initially, reversed as per the direction of Audit officers and re-credit taken on the items which are used in the manufacturing of machinery for further manufacturing of the Dye Intermediates. If that be so, I find that the judgment of the Tribunal in the case of Lark Wires & Infotech Ltd. (supra) and Solaris Chemtech Ltd. (supra) are directly applicable. I may reproduce the ratio of the Tribunal in the case of Lark Wires & Infotech Ltd. (supra) as enshrined in Paragraph No. 5.
“5…….Coming to the present case apparently the reversal of the amount Rs. 1,31,557/- in the RG23A Part-II register was made without any verification and on the basis of the direction of the officers who conducted the audit. Moreover, the reversal was not a conclusion of any legal process. Subsequently, when the assessee found that they were not eligible for the credit, they have promptly reversed the ineligible portion of the credit on their own. Therefore what has been done by the appellants is basically adjustment of the credit and it has no link to any transaction other than taking credit. Therefore, it is a mere adjustment and squarely covered by the decisions cited by the ld. Advocate.”
9. I find that the issue involved in the case before me and the case before Tribunal in the case of Lark Wires & Infotech Ltd. (supra) is identical and accordingly I hold that the impugned order is unsustainable.
10. Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellant, if any.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India
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