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Cardkem Pharma Pvt. Ltd V/S Commissioner of Central Excise, Customs and Service Tax-Vadodara-II

    Appeal No. E/11820/2016 (Arising out of OIA-CCESA-VAD--APP-II-MM-109-2016-17 dt 29/06/2016 passed by the Commissioner of Central Excise, Customs and Service Tax-Vadodara-II) and Order No. A/12955/2017

    Decided On, 11 October 2017

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

    By, THE HONORABLE JUSTICE: M.V. RAVINDRAN
    By, MEMBER

    For Petitioner: V. Kansara, Advocate And For Respondents: L. Patra, Authorised Rep.



Judgment Text


1. This appeal is directed against OIA-CCESA-VAD--APP-II-MM-109-2016-17 dt. 29/06/2016.

2. Heard both sides and perused the records.

3. The dispute that arises in this case is regarding the rejection of the claims filed by the appellant for recredit of an amount reversed by the them under misunderstanding of the during the period 2002-03 to 2004-05 (till August 2005). After issuing show cause notices, the Adjudicating Authority, following due process of law, allowed recredit of an amount of Rs. 7,50,155/- has been filed at the time and rejected the request for an amount of Rs. 12,00,734/- as time barred under the provisions of 11B of the CEA, 1944. Revenue has not preferred any appeal against the Cenvat Credit held as within the time and recredit allowed by the Adjudicating Authority. On an appeal filed by the appellant against the OIO that rejected claim for recredit of an amount of Rs. 12,00,734/- the First Appellate Authority also found no force in the contentions raised and rejected the appeal holding that provisions of Sec 11B would apply Central Excise Act, 1944 would apply.

4. Ld. Counsel submits as to Sec. 11B could not apply for the purpose of recredit of the amount of Cenvat Credit wrongly debited seems to be on strong wicket.

5. It is noticed from the records that the appellant is a job worker and they receive raw materials from the principal manufacturer and also utilize the raw material on which they have availed Cenvat Credit; under mis-understanding of the law they used to reverse proportionate amount of Cenvat Credit attributable to the quantity of their own raw material used in the activity of job working, subsequently, noticing that they need not reverse the amount in cenvat account, they filed a letter on 28.9.2005 requesting the Divisional Dy. Commissioner to grant the permission to avail credit of the amounts for the period in question. It is noticed from the said letter that the said letter is not seeking any refund of amount paid as duty liability on any goods. The said letter simply seeks only recredit of amount which had been debited under wrong understanding of the law is not challenged by Revenue, as the recredit allowed by adjudicating authority of Rs. 7,50,155/- is on this point only. Law on the subject is very clear that the job workers need not pay/reverse any amount of Cenvat Credit availed on the inputs which are used for job working activity.

6. I find that the contentions of the appellant are fortified by the judgment and order of Hon'ble High Court of Allahabad in the case of Kishnav Engg Ltd. 2016 (331) ELT. 391 (All.) After hearing both sides the said judgment held as under:

5. Having heard? the learned counsel for the parties, we find that the department has proceeded on the ground that the appellant had taken the Cenvat credit without any refund order or without permission from the proper authority and without filing proper documents under Rule 9 of the Rules of 2004. Rule 9 of the Rules of 2004 prescribes that Cenvat credit could be taken by the manufacturer on the basis of certain documents to be filed, namely, an invoice issued by the manufacturer for clearance of inputs or capital goods, etc. Admittedly, we find that the appellant had claimed Cenvat credit and had filed the proper invoice bills. The authority was satisfied and credit was allowed for which there is no dispute. However, for whatever reasons, the appellant reversed these Cenvat credit entries and debited the said amount in its books but subsequently, realised that they were eligible for Cenvat credit, inasmuch as furnace oil was an input as defined under the Rules, based on which, the assessee issued a letter dated 25th April, 2005 indicating its intention to again make the reversal of its Cenvat credit entries and also enclosing the original invoice bills.

6. In this view of the fact, we find that the show cause notice was wrongly issued on a wrong premise that no permission was taken or that original documents were not filed. In fact, we find that the appellant had not only intimated the department about its intention but also had filed the necessary documents. The letter indicated the details of the description of the goods, the invoice bills and the credit to be taken. This was in consonance with the provisions of Rule 9. If the authority had any objection they should have immediately asked the appellant for further clarifications, which in the instant case was not done.

7. The contention of the respondent that an application for refund of duty was required to be made under Section 11B of the Act does not hold water. It is not a case of refund of duty but a case of reversal of an entry in the books relating to Cenvat credit. We find support on this aspect of a judgment of the Madras High Court in ICMC Corporation Ltd. v. CESTAT, Chennai : 2014 (302) E.L.T. 45, where in similar circumstances the High Court held that the provisions of Section 11B of the Act was not applicable. We find that the appellant originally availed the Cenvat credit, which was allowed but for various reasons it reversed the credit. In our view, it is only an account entry reversal and there is no out flow of funds from the side of the appellant which may result in filing an application under Section 11B of the Act for claiming refund of duty. Consequently, in our opinion, the provision of Section 11B of the Act is not applicable.

8. Considering the fact that it is only an account entry reversal, we have no hesitation in holding that the Cenvat credit taken by the appellant by intimating the department vide their letter dated 25th April, 2005 was in accordance with the procedure provided under Rule 9 of the Rules of 2004.

7. It can be seen from the above reproduced ratio of the Hon'ble High Court t

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he appellants/assesses has a right to avail suo moto credit of the wrongly reversed amount more so, on this issue the appellant herein has been allowed credit. The logical conclusion arising, is that, Adjudicating Authority as well as the First Appellate Authority, has erred in holding that the time limitation as provided under Section 11B of CEA, 1944 will apply. 8. In view of the facts and circumstances of this case and the decision of the Hon'ble High Court as cited herein above, I find that the impugned order is unsustainable and liable to set aside and I do so. 9. The impugned order is set aside and the appeal is allowed.
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