By TIOL News Service

MUMBAI, FEB 03, 2017: THE appellant defaulted on the monthly duty payment.

It is the contention of the department that during the default period, duty is required to be paid in cash and on consignment basis and not from CENVAT Credit.

Complying the direction, the appellant paid the entire duty in cash, which was earlier paid from CENVAT account, on 5.10.2009.

Later, on 20.11.2009, they informed the department regarding the payment of duty in cash along with interest and requested that they be allowed to take re-credit of the payment earlier made in CENVAT account.

Another request was made on 19.03.2010. The R/s vide letter dt. 13.4.2010 advised the appellant to file refund claim. Appellants once again on 28.4.2010 requested the Superintendent to allow them to take re-credit. Finally, the appellant took re-credit and intimated the department on 29.6.2010.

A SCN came to be issued proposing recovery of the credit taken suo moto along with interest and penalty.

The demand was confirmed along with equivalent penalty by the adjudicating authority and this order was upheld by the Commissioner (Appeals).

The appellant is before the CESTAT.

It is submitted that since the duty was paid twice, the availment of re-credit was proper and there was no need to file any refund claim. In support, reliance is placed on the following decisions -

+ Shree Rubber Plast Co. Pvt. Ltd. - 2015-TIOL-1285-CESTAT-MUM

+ Balmer Lawrie And Co. Ltd. - 2014-TIOL-625-CESTAT-AHM

+ NOCIL - 2014-TIOL-203-CESTAT-MUM

+ ICMC Corporation Ltd. - 2014-TIOL-121-HC-MAD-CX

+ ICMC Corporation Ltd. - 2012-TIOL-1116-CESTAT-MAD

+ Sopariwala Exports Pvt. Ltd. - 2013-TIOL-1936-CESTAT-AHM

+ Krishnav Engineering Ltd. - 2016-TIOL-939-HC-ALL-CX

The AR while supporting the order submitted that refund claim is necessary in order to verify the aspect of limitation as well as unjust enrichment.

The Bench observed -

+ There is no dispute that on the same clearances, the duty was paid twice, from cenvat credit and second time from PLA on insistence of the department. Under any circumstances, the double payment of excise duty is not required.

+ Both the lower authorities by denying the re-credit otherwise held that both the amount is recoverable for which no authority is provided in the law to charge the duty twice on the same clearance.

+ Since there is no dispute about the payment made twice on the same clearance, I do not find any reason why the appellant is not entitled for the re-credit of duty paid from cenvat account when they have paid in cash that to complying the instruction of the department.

+ It is also to be noted that the appellant have not taken suo moto credit on their own but they made number of request by writing letter to the department regarding re-credit of amount in the cenvat account but the department instead of deciding the re-credit they have issued show cause notice and denied the re-credit which is absolutely illegal and incorrect.

+ Even if it is accepted that refund claim should have been filed, when the appellant have made request in writing for re-credit in the cenvat account, the same can be disposed of considering the refund claim of the appellant but instead of disposing request of re-credit both the lower authority has passed orders for recovery of the re-credit amount which is not legal and proper.

+ As regard unjust enrichment, first of all in case of taking credit, no issue of unjust enrichment arises. In the facts of the present case, the duty was paid twice on the same clearances, however, the duty passed on is only one time duty paid on the clearances, therefore the unjust enrichment does not apply. Moreover, the amount paid from Cenvat account has not been considered by the department as excise duty that is a reason they asked to pay in cash, which was complied by the appellant.

Holding that the appellant had correctly re-credited the cenvat amount, the impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-295-CESTAT-MUM)