In a significant, the Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT)has held that Cenvat Credit cannot be demanded after suo moto reversal and in absence of discrepancy.
Bayer Vapi Pvt Ltd, the appellant have paid duty on the export of all the goods at the time of clearance. Subsequently, while making the monthly payment of duty inadvertently they also included the duty paid on export in their monthly dues of the duty and the same was paid. Thus, they have paid the same duty twice.
When it was detected the appellant had taken the suo-moto credit in their Cenvat account. During the audit it was objected that the appellant should not have taken the suo-moto re-credit, whereas they should have applied for refund, on the appellant reversed the re-credit. However, the show cause notice was issued whereby, it was proposed to demand the amount of suo-moto re-credit and also to appropriate the same amount, which was reversed by the appellant on the direction of audit officers.
It was also proposed to demand the interest and imposition of penalty. The show cause notice was adjudicated by the Commissioner Central Excise, Customs & Service Tax Daman, whereby, the demand of Central Excise Duty equivalent to the Cenvat Credit availed suo-moto amounting to Rs. 1 crore was confirmed and the same was appropriated demand of interest and imposition of equal amount of penalty was also confirmed.
Shri S. Suriyanarayanan, Counsel, appearing on behalf of the appellant submitted that once the appellant had reversed the credit of duty, which was paid a second time no show cause notice should have been issued and the case could have been closed after reversal on the direction of the audit.
Further submitted that after reversal of the credit even on issuing a show cause notice the appellant made their submission before the Adjudicating Authority. Therefore, the Adjudicating Authority should have allowed the re-credit. Shri Tara Prakash, Deputy Commissioner (AR), appearing on behalf of the revenue reiterated the findings of the impugned order.
It was evident that the appellant initially paid the duty on export twice, once at the time of clearance of goods and the second at the closer of the month along with the monthly payment of duty. Therefore, there is no dispute that one clearance duty was paid twice, therefore the duty paid a second time needs to be restored to the appellant as credit, the appellant had taken suo-moto credit. I
The CESTAT viewed that if no discrepancy is found as regards the second time payment of duty and suo-moto re-credit thereof then no objection could have been raised by the department.
A two-member bench comprising Mr. Ramesh Nair, Member (Judicial) and Mr. C L Mahar, Member (Technical) observed that “ Since the appellant had already reversed the credit and we did not find any discrepancy about the double payment on duty and suomoto re-credit. Even, the same was not disputed by the department either in the show cause notice or in the order. The appellant is correctly entitled to the re-credit therefore we hold that the appellant has the legal right to re-credit the amount of Rs. 1 crore, in their Cenvat Account. “
The CESTAT while allowing appeal set aside the impugned order.
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