Valid Availment of Credit after Three and Half Years implies that Excise Duty Refund was sanctioned correctly: CESTAT [Read Order]

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that valid availment of credit after three and half years implies that excise duty refund was sanctioned correctly.

The appellant is holding Central Excise Registration and are engaged in the manufacture of ‘P & P Medicines’ falling under Tariff Heading 30049099 and 30039090 of the First Schedule to the Central Excise Tariff Act, 1985 and are availing the benefit of exemption under Notification No. 56/2002-CE dated 14.11.2002. As per Rule 2(k) of the Cenvat Credit Rules, 2004, Cenvat Credit was admissible to the appellant on their inputs namely furnace oil. However, it was noticed that during the period from April 2005 to March 2009, the appellant did not take/avail Cenvat Credit on furnace oil amounting to Rs.45,72,156/-.

The appellant filed detailed reply to the show cause notice controverted all the allegations in the show cause notice. After following the due process, the learned Commissioner confirmed the demand of Rs.41,71,424/- under Section 11A of the Central Excise Act along with interest under Section 11AB of the Central Excise Act and also imposed equivalent penalty under Section 11AC of the Central Excise Act.

The Counsel for the appellant submitted that the impugned order is not sustainable in law and is liable to be set aside as the same has been passed without properly appreciating the facts and the law and binding judicial precedents.

It was further submitted that the appellant did not avail Cenvat Credit on furnace oil under bonafide belief that the same is not available. Whereas, the appellant has been availing entire Cenvat Credit on other inputs and input service, but during the disputed period, they did not avail Cenvat Credit on furnace oil, which cannot establish that there is an intention to claim excess refund.

A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “We find that in the present case, it is not the stand of the Department that it has sanctioned/approved, refund of duty which was not paid by the appellant, but this is the case, in which the Department has sanctioned refund equal to the amount which was paid by the appellant in cash or through PLA, therefore, it cannot be said that this is a case of excess availment of refund by not complying with the condition of the said Notification.”

“It is also noticed that in the same impugned order, the learned Commissioner has dropped the demand of the Cenvat Credit availed on furnace oil even after three and half years by holding that there is no time limit for availment of Cenvat Credit by relying upon certain judgments of the Tribunal. It clearly shows that once it has been held that credit availed after three and half years is valid, this itself implies that the refund was sanctioned correctly” the Tribunal noted.

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