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CX – Appellant reversing CENVAT credit and paying interest and 25% penalty but not intimating CEX officer in writing – Revenue also not issuing any SCN – Appellant entitled to refund of amounts paid: CESTAT

2019-TIOL-2062-CESTAT-AHM

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 
WEST ZONAL BENCH, AHMEDABAD

Appeal No. E/12227/2018-SM

Arising out of OIA-84/2010-BVR-/KCG/COMMR-A-/AHD, Dated: 15.11.2010
Passed by the Commissioner of Central Excise-Ahmedabad-III

Date of Hearing: 08.03.2019
Date of Decision: 08.03.2019

M/s SAFEX ELECTROMECH PVT LTD

Vs

COMMISSIONER OF CENTRAL EXCISE
AHMEDABAD-I

Appellant Rep by: Shri N K Oza, Adv. 
Respondent Rep by: 
Mr T K Sikdar, AR

CORAM: Ramesh Nair, Member (J)

CX – Upon objection by Audit, appellant reversed credit along with interest and paid 25% penalty – subsequently, within a year of payment they filed a claim for refund but the same was rejected on the ground that the appellant have paid the amount in terms of s.11A(6), 11A(7) of CEA, 1944 without any protest and, therefore, the payment attained finality – appeal to CESTAT.

Held: On plain reading of the provisions of sub-section 6 & 7 of section 11A, it is apparent that not only the payment of amount, interest and 25% penalty but the appellant needs to give an intimation to the department accepting their liability which the appellant had not given – in such case, if at all the Revenue is of the view that the amount is legally payable, it was incumbent on the Revenue to issue a SCN which they failed to do so – Therefore, the appellant is rightly entitled for refund of the amount of CENVAT Credit, interest and penalty paid by them – impugned order set aside and appeal allowed – adjudicating authority to process the refund in accordance with law: CESTAT [para 5]

Appeal allowed

Case laws cited:

Nirlep Alliances Ltd.-2018 (362) ELT 915 (Tri.-Mumbai)…Para 2

K. Padmanaban Logistices Pvt. Ltd.-2018 (362) ELT 916 (Tri. Chennai) = 2018-TIOL-2531-CESTAT-MAD …Para 2

Veena Industries Ltd.-2015 (12) LCX0065…Para 2

Godrej & Boyce Mfg.Co.Ltd-2016 (09)LCX0170…Para 2

FINAL ORDER NO. A/10462/2019

Per: Ramesh Nair:

The appellant is engaged in the manufacture of crane, hoists etc. When the said goods are manufactured and supplied, the appellant are also undertaking the activity of Erection, Commissioning and Installation of such cranes, hoists etc. On this activity the appellant has been paying service tax. They are also outsourcing the services of a service provider which is used in relation to the output service of Erection, Commissioning and Installation. The appellant availed the cenvat Credit on such inputs service. The audit has raised the objection, they reversed credit along with interest and 25% penalty. Subsequently, within one year of their payment, the appellant filed a refund claim and same was rejected and upheld by Commissioner (Appeals) on the ground that the appellant have paid the amount in terms of Section 11A(6&7) without any protest therefore, the payment attained finality and no refund can be claimed, therefore, the present appeal.

2. Shri. N.K. Oza, Ld. Counsel appearing on behalf of the appellant submits that there is no dispute that the credit was taken on the inputs service which was used in providing output service of Erection, Commissioning and Installation of cranes, hoists etc. Though the appellant had paid at the time of audit, the cenvat amount along with interest and 25% penalty of Cenvat but, had not opted for benefit available under Section 11A (6 & 7) of Central Excise. They have also not given any intimation with regard to this payment. Therefore, the refund claim made by them is legal and correct. He placed reliance on the following judgment:

– Nirlep Alliances Ltd.-2018 (362) ELT 915 (Tri.-Mumbai)

– K. Padmanaban Logistices Pvt. Ltd.-2018 (362) ELT 916 (Tri. Chennai) = 2018-TIOL-2531-CESTAT-MAD

– Veena Industries Ltd.-2015 (12) LCX0065

– Godrej & Boyce Mfg.Co.Ltd-2016 (09)LCX0170

3. Shri. T.K. Sikdar, Ld. Assistant Commissioner (AR) appearing on behalf of the revenue reiterates the finding of the impugned order.

4. On careful consideration of the submissions made by both the sides and perusal of the records, I find that though the appellant had paid cenvat amount along with interest and 25% penalty on the instance of audit objection but subsequently, they claimed the refund. The only reason for rejection of the claim is that the appellant had opted for the provision made under sub-Section 6 & 7 of Section 11A which reproduced below:-

(6) Any person chargeable with duty under sub-section (5), may, before service of show cause notice on him, pay the duty in full or in part, as may be accepted by him along with the interest payable thereon under section 11AA and penalty equal to one per cent of such duty per month to be calculated from the month following the month in which such duty was payable, but not exceeding a maximum of twenty five per cent of the duty, and inform the Central Excise Officer of such payment in writing.

7) The Central Excise Officer, on receipt of information under sub-section (6) shall -.

(i) not serve any notice in respect of the amount so paid and all proceedings in respect of the said duly shall be deemed to be concluded where it is found by the Central Excise Officer that the amount of duty, interest and penalty as provided under sub-section (6) has been fully paid;

(ii) proceed for recovery of such amount if found to be short-paid in the manner specified under subsection (1) and the period of one year shall be computed from the date of receipt of such information.

Xxxxxxxxxxxxxx

(emphasis)

5. On plain reading of the above provision it is not only the payment of amount, interest and 25% penalty but the appellant needs to give an intimation to the department accepting their liability which the appellant had not given, in such case if at all the Revenue is of the view that the amount is legally payable, it was incumbent on the Revenue to issue a SCN which they failed to do so. Therefore, in these circumstances, the appellant is rightly entitled for refund of the amount of Cenvat Credit, interest and penalty paid by them. Accordingly, I set aside the impugned order and allow the appeal. The adjudicating authority shall process the refund in accordance with law.

(Dictated and Pronounced in the open court)

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