ER-1 Return Qualifies as a Valid Duty-Paying Document under Rule 9(2) of CENVAT Credit Rules: CESTAT [Read Order]
CESTAT held that an ER-1 return qualifies as a valid duty-paying document under Rule 9(2) of the CENVAT Credit Rules, allowing re-credit of excess duty paid.
Valid Duty-Paying - CENVAT Credit Rules - CESTAT - taxscan
Valid Duty-Paying - CENVAT Credit Rules - CESTAT - taxscan
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that an ER-1 return can be treated as a valid duty-paying document under Rule 9(2) of the CENVAT CreditRules, 2004, for availing re-credit of excess duty paid.
Jakson Engineers Ltd., the appellant, is engaged in the manufacture of solar power generating systems and other related products under Chapter 85 of the Central Excise Tariff Act, 1985.
During the months of June and July 2016, the appellant paid excess excise duty on certain clearances where no duty was payable. Upon realizing the mistake, the appellant informed the jurisdictional authorities and, in February 2017, took suo motu CENVAT credit of Rs. 86,33,733 to adjust the excess amount paid earlier.
The department objected, stating that there was no provision for taking credit on its own and that any excess duty payment could only be claimed as a refund under Section 11B of the Central Excise Act, 1944. The Range Superintendent advised the appellant to file a proper refund claim, but the appellant did not comply and adjusted the credit in its ER-1 return.
A show-cause notice was issued demanding recovery of the amount along with interest and penalty. The adjudicating authority confirmed the demand and penalty, and the Commissioner (Appeals) upheld the order. The appellant then filed an appeal before the Tribunal.
The appellant’s counsel argued that the amount paid in excess was not duty within the meaning of Section 11B and that the ER-1 return merely reflected a correction of an accounting error, not a fresh availment of credit. They also argued that the ER-1 return contained all the necessary particulars prescribed under Rule 9(2) of the CENVAT Credit Rules and thus qualified as a valid document.
The two-member bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) examined the ER-1 returns and observed that the appellant had indeed paid excess duty during June and July 2016 and the fact of such payment was not disputed by the department.
The tribunal observed that the ER-1 return contained all necessary details, such as assessable value, duty payable, registration number, and clearance particulars, as required under the proviso to Rule 9(2). The tribunal held that the ER-1 return qualifies as a valid duty-paying document and that the re-credit based on such return was legally permissible.
The tribunal partly allowed the appeal, holding that the ER-1 return qualifies as a valid duty-paying document under Rule 9(2) of the CENVAT Credit Rules and that only the minor excess credit of Rs. 2,35,184 was recoverable.
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