The Customs, Excise &Service Tax Appellate Tribunal (CESTAT) of Delhi has held that the non-utilised Cenvat credit of EC & SHEC for payment of output tax/duty after 01.03.2015 is allowable to refund.
M/s Mahavir Transmission Ltd, the appellant challenged the validity of the show cause notice issued by invoking the extended period of limitation and demand of Rs. 3,27,325/- made for use of E. Cess & SHE Cess for payment of duty in December 2016.
The appellant is a manufacturer of AC Conductors, which are used in the transmission of electricity. As of 28.02.2015, the appellant had a credit balance in the Cenvat Registerof Education Cessand Secondary & Higher Education Cess of Rs.3,27,325/-.
Under the provisions of Cenvat Credit Rules, Rule 3(7)(b), the appellant/assessee was entitled to use the credit in respect of Education Cess and Secondary & Higher Education Cess for payment of Education Cess on duty or taxable services and credit of Secondary and Higher Education Cess could be used for payment of such cess on excise duty on output service tax.
From 01.03.2015, under the Finance Bill/Act, 2015, levy EC. & SHE Cess was exempted on goods. Rule 3 (7)(b) of Cenvat Credit Rules was substituted
It was contended by the appellant that they had filed their ER-I Return for the month of February on 11.03.2015, wherein they had shown the unutilized portion of Education Cess /S. Higher Education Cess at Rs.3,27,325/-.
Revenue pointed out that the appellant have wrongly utilized the cenvat credit of Education Cess and SHE Cess of Rs.3,27,325/-, which was not available to them under the amended provisions of Cenvat Credit Rules, read with notification. The appellant contested the show cause notice on the ground of invocation of extended period of limitation. The Adjudicating Authority confirmed the demand along with interest and an equal amount of penalty under Section 11 AC read with Rule 15 of CCR, 2004. The penalty was also imposed of Rs.5,000/- under Rule 15 A of CCR.
A Coram of single member Shri Anil Choudhary, member (judicial) observed that the appellant not utilized the Cenvat credit of EC & SHEC for payment of output tax/duty in December 2016, the same would have become refundable as of 30/06/2017. If the appellant is required to deposit the said amount of Rs. 3,27,325/- in cash, it will become entitled to a refund of the duty earlier paid by utilization of credit of EC & SHEC.
The Tribunal allowed the appeal and set aside the impugned order. Mr Rajesh Gupta, Advocate appeared for the appellant and Shri Divey Sethi, Authorised Representative appeared for the respondent.
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