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M/s. United Metal Industries v/s CCE, Chennai

    E/PD/428 of 2008 and E/526 of 2008

    Decided On, 16 October 2009

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai


    Shri M. Karthikeyan, Consultant for the Appellants. Ms. Indira Sisupal, JDR for the Respondent.

Judgment Text

Heard both sides. As it is possible to hear and decide the case itself today the requirement of predeposit is waived and the appeal is taken up for decision.

2. In this case the appellants took input duty credit in respect of the inputs used in the manufacture of the impugned goods on job work basis which was sent without payment of duty to the principal manufacturer who in turn cleared the same on payment of duty. At the instance of the Department the appellants initially reversed the credit but subsequently took suo moto credit of the same coming to know that in such a case the credit is admissible as held by the larger Bench in the case of Sterlite Industries (I) Ltd. Vs. CCE, Pune 2005 (183) ELT 353 (Tri. - LB). The Department took objection to the suo moto taking of the credit and the present proceeding was initiated. In the meantime another larger Bench of the Tribunal in the case of BDH Industries Ltd. Vs. CCE - 2008-TIOL-1211-CESTAT-MUM-LB has held that there is no provision in the Central Excise Act and Rules permitting taking credit suo moto and that filing of a refund claim under Section 11B is necessitated. Citing this order the lower appellate authority has confirmed the demand as well as ordered for paying the interest and penalty.

3. Shri M. Karthikeyan, learned consultant appearing for the appellants states that the appellants have filed a refund claim subsequently. As regards the principal amount of the credit, they had taken the same and has been reversed again so no amount is outstanding from them. However, in view of the decision in the case of Sterlite Industries (I) Ltd. (supra), which allows credit in such a case, he prays for setting aside the interest and penalty.

4. Ms. Indira Sisupal, JDR appearing for the Department states that on instruction from the jurisdictional Commissioner that the refund claim has been allowed by the original authority but an appeal by the Department has been filed before the first appellate authority.

5. In view of the submissions made and taking in view the cited decisions of the larger Bench, I am of the view that while action on the refund

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claim may take its own course there is no cause for imposition of interest and penalty in this case. As such the impugned order insofar as it relates to levy of interest and penalty is set aside. The appeal is partly allowed in the above terms.