VKJ Latest News Update

VKJ Law Offices of Vinay K. Jain Advocates & Solicitors

CX – Once Rule 8(3A) of CER has been declared as unconstitutional, duty paid again in cash is to be refunded in cash in view of s.142 of the CGST Act – no need to file claim u/s 11B: CESTAT

2019-TIOL-2247-CESTAT-BANG

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, BANGALORE

Appeal No. E/20378/2018-SM

Arising out of Order-in-Appeal No. 323/2017-CT, Dated: 11.10.2017
Passed by Commissioner of Central Tax, BANGALORE-II (Appeal)

Date of Hearing: 12.02.2019
Date of Decision: 12.02.2019

M/s MINERAL ENTERPRISES LTD
KHANIJA BHAVAN 3RD FLOOR WEST WING
NO. 39 RACE COURSE ROAD BANGALORE-560001
KARNATAKA

Vs

COMMISSIONER OF CENTRAL TAX
BANGALORE NORTH WEST COMMISSIONERATE
2ND FLOOR, SOUTH WING, BMTC BUS STAND COMPLEX SHIVAJI
NAGAR BENGALURU-560051 KARNATAKA

Appellant Rep by: Mr Dayananda K, CA
Respondent Rep by: Mrs Kavitha Podwal, Superintendent AR

CORAM: S S Garg, Member (J)

CX – The assessee is registered as 100% EOU and engaged in mining and export of iron ore and manganese ore and are availing the facility of CENVAT credit under CCR, 2004 – They did not pay the excise duty on DTA sale for period February 2012 to December 2012 and on being pointed out, the assessee paid the duty by using CENVAT credit but the Department raised the objection of payment through CENVAT credit in view of Rule 8(3A) of Central Excise Rules – Thereafter, the assessee paid duty by cash and took re-credit of CENVAT credit account, for which the Department issued SCN – In view of the settled position in case of Motorola India Pvt. Ltd., the assessee was entitled to take re-credit suo moto – Once Rule 8(3A) has been declared as unconstitutional which means that the payment made by assessee on 15.2.2013 itself was correct and there was no requirement to pay the same again in cash but having been paid the same by cash again, the assessee is entitled to get back this amount paid by cash and as per the provisions of Section 142 of CGST Act, the assessee is entitled to get the refund in cash if the same arises on account of the litigation – Further, in case of K. G. Denim Ltd. 2017-TIOL-1293-HC-MAD-CX, the Madras High Court has also held that there is no impediment to grant of refund in cash to the assessee, and they are not required to file the refund as per Section 11B(2) of CEA, 1944 – The impugned order is not sustainable in law and therefore, same is set aside and the assessee is entitled to get the cash refund which he paid twice: CESTAT

Appeal allowed

Case laws cited:

Motorola India Pvt. Ltd. : 2006 (206) ELT 90… Para 4

Indsur Global Ltd. vs. UOI: – 2014-TIOL-2115-HC-AHM-CX… Para 4

K. G. Denim Ltd – 2017-TIOL-1293-HC-MAD-CX… Para 6

FINAL ORDER NO. 20155/2019

Per: S S Garg:

The present appeal is directed against the impugned order dated 11.10.2017 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant.

2. Briefly the facts of the present case are that the appellant is registered as 100% EOU engaged in mining and export of iron ore and manganese ore and are availing the facility of CENVAT credit under CENVAT Credit Rules, 2004.

2.1 On the basis of intelligence that the appellant had suo moto availed CENVAT credit without following proper procedure, the Central Excise Headquarters Preventive Unit, Bangalore-II Commissionerate conducted further investigation. It was observed that during the period from February 2012 to December 2012, the appellants had defaulted in payment of Central Excise duty towards DTA clearances totally amounting to Rs.26,93,388/- . The appellants paid the amount on 15.2.2013 by debiting their service tax CENVAT account. On being pointed out by the Range Superintendent that the assessee was not eligible to utilize CENVAT credit inasmuch as they had defaulted in payment of duty under Rule 8(3A) of Central Excise Rules, 2002, the appellants paid the said duty amount of Rs.26,93,388/- in cash vide Challan dated 6.3.2013. The appellants have subsequently suo moto availed CENVAT credit of the amount paid on 15.2.2013 in their Service Tax CENVAT Account on 7.3.2013 without filing any refund application with the Department. On being pointed out, the appellants reversed the said CENVAT credit of Rs.26,93,388/- in their CENVAT Account on 13.3.2014 under protest. On these allegations, a show-cause notice dated 6.1.2015 was issued to the appellant and after following the due process, the original authority confirmed the demand. Aggrieved by the said order, appellant filed appeal before the Commissioner (A), who rejected the same. Hence, the present appeal.

3. Heard both the parties and perused the records.

4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same is contrary to the facts and the law and binding judicial precedents. He further submitted that the appellant had defaulted in the payment of duty for the period February 2012 to December 2012 and thereafter, when the mistake was pointed out, he paid the same through CENVAT credit but the same was objected to by the Department and thereafter, the appellant paid the duty in cash which amounts to double payment of duty. Thereafter, the appellant took re-credit which was also objected to by the Department on the ground that he cannot take the re-credit on his own and has to file the refund claim under Section 11B of the Central Excise Act. He further submitted that this issue is no more res integra that suo moto re-credit is permissible as held by the Karnataka High Court in the case of Motorola India Pvt. Ltd. : 2006 (206) ELT 90. The learned counsel also relied upon the decision of CESTAT Mumbai in the case of M/s. Raptakos Brett & Co. Ltd. vs. CCE which relied upon the decision of the Karnataka High Court in the case of Motorola India Pvt. Ltd. In the case of Motorola India Pvt. Ltd., the Karnataka High Court has held that “The Tribunal after noticing the material facts has chosen to allow the claim on the basis that the amount paid by mistake cannot be termed as duty in the case in hand”. The learned counsel further submitted that Rule 8(3A) has been declared as unconstitutional by the High Court of Gujarat in the case of Indsur Global Ltd. vs. UOI: –2014-TIOL-2115-HC-AHM-CX and once Rule 8(3A) is held as unconstitutional, the payment made on 15.2.2013 itself is correct and there was no requirement to pay the same again by cash and the Department should not have issued any notice. He further submitted that the appellant had reversed the amount under protest and the same is liable to be refunded along with interest. He also submitted that as per the provisions of Section 142(8) of CGST Act, any refund arising out of the previous litigation should be refunded by cash.

5. On the other hand, the learned AR defended the impugned order and submitted that suo moto re-credit is inadmissible under law and the appellant was required to file the refund claim.

6. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant did not pay the excise duty on the DTA sale for the period February 2012 to December 2012 to the extent of Rs.26,14,940/- and on being pointed out, the appellant paid the duty on 15.2.2013 by using the CENVAT credit but the Department raised the objection of payment through CENVAT credit in view of Rule 8(3A) of the Central Excise Rules. Thereafter, the appellant paid the duty by cash and took re-credit of the CENVAT credit account, for which the Department issued the show-cause notice. In view of the settled position in the case of Motorola India Pvt. Ltd. cited supra, the appellant was entitled to take re-credit suo moto. Further, I find that once Rule 8(3A) has been declared as unconstitutional which means that the payment made by the appellant on 15.2.2013 itself was correct and there was no requirement to pay the same again in cash but having been paid the same by cash again, the appellant is entitled to get back this amount paid by cash and as per the provisions of Section 142 of CGST Act, the appellant is entitled to get the refund in cash if the same arises on account of the litigation. Further, I find that in the case of K. G. Denim Ltd. reported in 2017 (7) GSTL 422 2017-TIOL-1293-HC-MAD-CX, the Hon’ble Madras High Court has also held that there is no impediment to grant of refund in cash to the assessee, and they are not required to file the refund as per Section 11B(2) of the Central Excise Act, 1944. In view of my discussions above, I am of the view that the impugned order is not sustainable in law and therefore, I set aside the same by allowing the appeal of the appellant and hold that the appellant is entitled to get the cash refund of Rs.26,14,940/- which he paid twice. Appeal is accordingly allowed with consequential relief, if any.

(Operative portion of the Order was pronounced in Open Court on 12.02.2019)

Leave a Reply

Close Menu
%d bloggers like this: