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CX – Restoration of credit is mere accountal that was not required to be processed in accordance with S.11B of CEA, 1944: CESTAT

By TIOL News Service

MUMABI, JULY 19, 2017: THE Appellant had supplied customized electrical equipment to M/s Moser Baer India Ltd , an 'export oriented unit' in Greater NOIDA, without payment of duty, against 're-warehousing certificate' that was required to be furnished to the jurisdictional assessing authorities within a period of 90 days from the date of clearance and which, was not complied with.

Pursuant to the insistence by the jurisdictional authorities, the appellant debited the duty of Rs.2,90,858/- on 23.01.2008, 'Under Protest'.

Thereafter, upon receipt of the 're-warehousing certificate', the appellant reversed the debit entry on 27th March 2008 under intimation to the range officer.

Apparently piqued by this unilateral move, the R/S issued a SCN for recovery of the said amount and for penal action.

The adjudicating authority, vide order dated 15th May 2009, placed reliance on the decision in Century Rayon to deny the unilateral restoration of credit which could have been obtained only by recourse to section 11B of CEA, 1944 and, in addition to ordering recovery imposed penalty of Rs. 5,000 on the appellant.

Consequent,the appellant debited this amount in the CENVAT Credit account on 30th June 2009 and fileda refund claim on 12.03.2010.

Incidentally, the imposition of penalty was separately challenged before the Commissioner(A) and its fate is not on record.

The refund claim was rejected by the original authority and the same was upheld by the Commissioner(A) on 6th January 2012.

This is how an appeal came to be filed before the CESTAT.

None appeared for appellant.

The Bench after hearing the AR inter alia observed –

++ In this welter of reversals and re-credits, the core of the issue appears to have been obfuscated.

++ The issue for determination is the maintainability, or otherwise, of the refund claimed which, in effect, seeks restoration of a credit that had been reversed consequent upon an adjudication order.

++ Restoration of credit is mere accountal that was not required to be processed in accordance with Section 11B of Central Excise Act, 1944. Consequently, the claim for refund, the show cause notice for rejection, the adjudication order and the impugned order are not sustainable in law.

++ The appellant is at liberty to adjust the CENVAT credit to the extent permitted by the CENVAT Credit Rules, 2004.

The Appeal was disposed of.

(See 2017-TIOL-2479-CESTAT-MUM)


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