M/S. Auro Spinning Mills vs Commissioner Of Central Excise

[Arising out of Order-In-Appeal No. 108/CE/CHD/2010 dated 9/08/2010 passed by Commissioner of Central Excise (Appeals), Chandigarh ]

For approval and signature:

Honble Mr Ashok Jindal, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Auro Spinning Mills Appellants

Vs.

Commissioner of Central Excise Respondent

Chandigarh

Appearance:

Shri Rupinder Singh, Advocate for the Appellants

Shri A K Dhawan, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 3.3.2015

FINAL ORDER NO. A/ 50639 /2015-Ex(SM)

Per Ashok Jindal :

The appellants in appeal against the impugned order.

2. The facts of the case are that the appellant is manufacturer of excisable goods and availed the exemption under notification No. 30/04. Initially the appellant procured capital goods and availed the cenvat credit thereafter on presumption that as they were availing the exemption under Notification No. 30/04, they reversed the cenvat credit taken on these capital goods. Later on realizing that they are entitled to take Cenvat credit on these capital goods, they took suo moto credit which was reversed by them. On scrutiny of ER I return, it was found that appellant has taken the suo moto credit. Therefore, the same was sought to be denied by way of show cause notice on the premise that as per Rule 9 of the Cenvat Credit Rules, 2004, they have taken the suo moto credit without any document as prescribed under Rule 9 of Cenvat Credit Rules, consequently the impugned proceedings were initiated by the adjudicating authority confirming the demand on the premise that appellant is required to file refund claim under section 11 B of the Central Excise Act 1944. The same was confirmed by the Commissioner (Appeal). Therefore, the appellant is before me.

3. The Learned Counsel appearing on behalf of the appellant submits that in this case the show cause notice was issued to the appellant to deny suo moto credit on the premise that same has been taken without proper documents. But the adjudicating authority traveled beyond the show cause notice and held that the appellant taken credit of duty and same was required to be reversed. In these circumstances, the appellant is required to file refund claim of duty paid by them under section 11B of the Act. Moreover, he submits that issue has been settled by Honble Madras High Court in the case of ICMC Corpn. Ltd. vs. CESTAT, Chennai [2014 (302 ELT 45 (Chen)]. Therefore, he prays that impugned order be set aside.

4. On the other hand learned AR reiterated the finding of the impugned order.

5. Heard the parties. Considered the submissions.

6. In this case, it is not disputed that the appellant is entitled to take Cenvat credit on the capital goods which they have reversed and again they have taken suo moto. Therefore, in these set of facts, the decision of ICMC Corpn. Ltd. (supra) is squarely applicable to the facts of this case, wherein the Honble High Court has held as under:

13. We do not subscribe to the view expressed by the? Revenue. Admittedly, the assessee originally availed the Cenvat credit on Service Tax for discharging its liability. However, for sound reasons, it reversed the credit. Strictly speaking, in this process, there is only an account entry reversal and factually there is no outflow of funds from the assessee to result in filing application under Section 11B of the Central Excise Act, 1944 claiming refund of duty. The contention of the Revenue that even in reversal of the entry there is bound to be an unjust enrichment has no substance or based on any legal principle, since, what is availed off by the assessee is only a credit on the duty paid on the services rendered. Further, the assessee is entitled to take note of as per Rule 6(5) of the Cenvat Credit Rules, 2004. as there is no dispute of the fact that a sum of Rs. 3,21,308/- available as Cenvat credit was in respect of input services, which are given under Rule 6(5) of the Cenvat Credit Rules, 2004. When that being the case, in respect of those services specifically mentioned under Rule 6(5) of the Cenvat Credit Rules, 2004 as it existed during the relevant period viz., 2004-2006 getting the reversal of the entry is in tune with its stand taken, which was accepted by the Tribunal in the earlier round of litigation.

6. Therefore, I hold that appellant has correctly taken the suo moto credit. In these circumstances, impugned order is set aside. Appeal is allowed with consequential relief, if any.

(dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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