Decided on January 28,2015

Commissioner Of C. Ex., Jammu Respondents


(2.)THE appellant have manufacturing unit in Samba in the State of Jammu & Kashmir. The factory is located in the area specified in the Notification No. 56/2002 -C.E. and goods manufactured by them are also other than those covered by the negative list of the notification. The appellant were availing the exemption under Notification No. 56/2002 -C.E. In terms of this notification, the goods covered by this exemption notification and cleared from the units located in the areas specified in this notification, are exempt from the basic Excise duty, additional Excise duty levied under Additional Duties of Excise (Goods of Special Importance) Act, 1957 [AED (GSI)] and additional Excise duty leviable under Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 [AED (T & TA)], to the extent these duties are paid thorough PLA after exhausting the Cenvat credit available to the unit at the end of the month for payment of duty. Thus, to the extent, the duty for a particular month is paid by an assessee, availing of this exemption, through PLA, after paying duty to the extent possible through Cenvat credit available at the end of the month, he is entitled for its refund, which he can either take as self -credit in the PLA or for which, he can make an application to the Assistant Commissioner and the quantum of refund under this exemption notification is total duty liability for a month minus the Cenvat credit available at the end of the month and accordingly availability of more Cenvat credit means less benefit. In this case, the appellant were availing this exemption by the way of self -credit of the duty paid through PLA in respect of clearances made during a particular month. During December, 2006, the appellant by mistake took excess capital goods Cenvat credit of Rs. 41,83,045/ - and similarly during the March, 2007 they took excess input duty Cenvat credit of Rs. 9,57,700/ -. Thus, during the month of December, 2006 and March, 2007, the total Excess Cenvat credit taken by the appellant was Rs. 51,40,745/ -. On account of this excess availment of Cenvat credit, the appellant during these months paid lesser duty through PLA and to that extent received lesser amount of refund. Subsequently, the taking of excess Cenvat credit was detecting by the Jurisdictional Central Excise Officer. The appellant, on 30th September, 2007, reversed the entire excess Cenvat credit of Rs. 51,40,745/ - by making a debit entry in the PLA. However, after making this debit entry in the PLA for an amount of Rs. 51,40,745/ -, they, in October, 2007 also took itself -credit in the PLA. It is this self -credit of Rs. 51,40,745/ - taken in October, 2007 which was objected to by the Department on the ground that self -credit is permissible only of the duty which had been paid through PLA on the finished goods cleared during a month, while in this case, the debit entry in the PLA had been made was for reversing the wrongly taken Cenvat credit. Accordingly, a show cause notice dated 26 -9 -2008 was issued to the appellant for recovery of this self -credit along with interest and imposition of penalty. The Commissioner vide Order -in -Original dated 11 -2 -2010 confirmed the demand of self -credit of Rs. 51,07,031/ - along with interest and imposed penalty of equal amount. Against this order of the Commissioner, Appeal No. E/1119/2010 has been filed.
1.1 The taking of self -credit by the way of credit entry in PLA, in October, 2007 of an amount of Rs. 51,40,745/ - was also objected to by the Jurisdictional Assistant Commissioner and he by an Order -in -Original dated 17 -2 -2009 passed by him, denied the self -credit of Rs. 57,07,031/ -. On appeal being filed to Commissioner (Appeals) vide Order -in -Appeal dated 26 -3 -2010 upheld the Assistant Commissioner's order. Against this order of the Commissioner (Appeals), Appeal No. E/3189/2010 has been filed.

1.2 On 8 -8 -2011, the Assistant Commissioner passed an order sanctioning the refund for subsequent months under Notification No. 56/2002 -C.E. and against the quantum of refund sanctioned, he adjusted amount of Rs. 51,07,031/ - towards the penalty imposed by the Commissioner's order dated 11 -2 -2010. The appeal against this order of the Assistant Commissioner was dismissed by the Commissioner (Appeals) vide Order -in -Original dated 28 -8 -2012. Against this order of the commissioner, Appeal No. E/3613/2012 has been filed.

Heard both the sides.

Shri Amit Jain, Advocate, the ld. Counsel for the appellant, pleaded that during December, 2006 and March, 2007, they, by mistake had taken excess Cenvat credit in respect of capital goods and inputs totaling Rs. 51,40,745/ -, that on account of this excess Cenvat credit taken during those months, they, during those months, paid to that extent, lesser duty through PLA and received lesser refund under Notification No. 56/2002 -C.E., that the appellant by availing this excess credit, had nothing to gain, that, when this excess credit was pointed out to them, they reversed this credit but instead of reversing this credit in their Cenvat credit account, they made a debit entry of Rs. 51,40,745/ - in their PLA, and subsequently, made a credit entry in October, 2007 towards self -credit of this account, that this amount represents the duty which they would have paid through PLA in December, 2006 and March, 2007 if the excess Cenvat credit by mistake had not been taken, that, therefore, the appellant have correctly debited this amount in PLA and have correctly taken the self -credit of this amount, that the situation as such is revenue neutral and that in view of this, the Commissioner's order dated 11 -2 -2010 denying the self -credit of this amount and ordering its recovery along with interest and imposing penalty of equal amount is not correct, that in any case, when the Assistant Commissioner on 17 -2 -2009 has passed an order denying the self -credit, the Commissioner's order dated 11 -2 -2010 was invalid, that since, order passed by the Commissioner as well as by Assistant Commissioner denying the self -credit of Rs. 51,07,031/ - is incorrect, the recovery of penalty of the same amount by the Assistant Commissioner by adjusting the refund claim for subsequent months is also not sustainable and that in view of this, the above impugned order are not correct.

(3.)SHRI R.K. Grover, ld. DR defended the impugned order by reiterating the findings of the Commissioner.

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