By TIOL News Service

MUMBAI, DEC 06, 2017: THE appellant availed CENVAT credit in respect of Bagassee Baling Machine.

Part of the baggase is used in the course of manufacture of final product which is cleared on payment of duty.

Audit party raised objection in the matter of credit availed and, therefore, appellant paid the duty, interest and 25% penalty.

Subsequently, after obtaining legal opinion that the credit is admissible,the appellant filed refund claim which was rejected on the ground that appellant having paid the entire duty, penalty and interest, the matter stands closed and they could not have claimed refund in respect of concluded matter.

The Commissioner(A) while observing that the matter could not have been treated as closed as concluded by the lower authority, nonetheless, he rejected the claim on the ground that the CENVAT credit itself was inadmissible.

The appellant is, therefore, before the CESTAT and submits that the order having travelled beyond the scope of the SCN, the same is not sustainable. So also, the credit is rightly taken in view of the decision in Jawahar SSK Ltd -   2006-TIOL-1941-CESTAT-MUM.

The AR reiterated the stand taken by the original authority.

The Bench observed –

"5. As regard the issue that by making payment of duty, interest and penalty, matter stands concluded, Ld. Commissioner in para 8 of his order clearly held that provision of Section 11A(7) is only to be understood in the context of further litigations raised by way of issuance of show cause notice. This does not mean that everything is relating to the duty payment is closed. According to this finding it is open for the assessee to litigate the matter but it is not open for the department to issue show cause notice. However, revenue has not challenged this findings therefore it is attained finality. Ld. Commissioner(Appeals) further proceeded on admissibility of the Cenvat credit on the bailing machine. It is observed that the said issue was not raised in the show cause notice therefore Ld. Commissioner(Appeals) travelled beyond the scope of the show cause notice for this reason itself order is not sustainable. Even on the issue of admissibility of Cenvat credit on bailing machine it is observed that it is incorrect to say that bailing machine was used exclusively for exempted goods. The fact is not under dispute that said machine is used for bailing of bagasse which partly used in the factory of the appellant as fuel therefore bailing machine is not used for exclusively in the manufacture of exempted goods, accordingly, Cenvat credit is admissible…"

Concluding that in view of the cited decision, the appellant is entitled to take CENVAT credit on baling machine and, therefore, entitled for the refund of credit reversed, the CESTAT directed the adjudicating authority to reprocess the refund in accordance with law.

The Appeal was allowed in the above terms.

(See 2017-TIOL-4283-CESTAT-MUM)