Sanjiv Srivastava ORDER
S.K. Mohanty, Member (J)
1. Brief facts of the case are that the appellants are engaged in the manufacture of transformers, falling under Chapter Heading No. 8504 of the Schedule to Central Excise Tariff Act, 1985. For smooth functioning of the said final product, the appellants use transformer oil, purchased from third parties. During the disputed period, the appellants had entered into contract with M/s. Power Grid Corporation of India Ltd., West Bengal for supply and installation of the transformers at the customer's site. As per the contract, the appellants were required to dispatch transformers along with transformer oil. For supply of the transformers, the appellants have computed and paid the central excise duty on the assessable value of both transformer and transformer oil. But, the transformer oil was not supplied along with the transformers. The said oil was subsequently supplied on payment of appropriate central excise duty. The appellants realized their mistake that duty liability had been discharged twice on transformer oil. Accordingly, they had taken credit of Central Excise duty paid on such oil in their Cenvat account. Taking of suo motto credit by the appellants was disputed by the department and show cause proceedings were initiated, seeking for recovery of the wrongly availed Cenvat Credit along with interest and for imposition of penalty. The show cause notice dated 04.10.2007 was adjudicated vide order dated 02.02.2009, wherein the proposals made therein were dropped, on the ground that the appellants indeed had made payment of excise duty on two occasions and taking of credit based on appellants' own invoice in a technical contravention. Against the adjudication order dated 02.02.2009, Revenue has filed appeal before the Learned Commissioner (Appeals), which was disposed of vide the impugned order dated 16.08.2010, by setting aside the adjudication order and in allowing the appeal in favour of Revenue. The Learned Commissioner (Appeals) has held that suo motto credit cannot be taken without applying for refund in terms of Section 11B of the Central Excise Act, 1944. He has relied upon the judgment of Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. Vs. Union of India-MANU/SC/1203/1997 : 1997 (89) ELT 247 (SC), Larger Bench decision of this Tribunal in the case of BDH Industries Ltd.- 2008 (229) ELT 364 (Tri.-LB) and the decision of Double Member Bench of the Tribunal in the case of Comfit Sanitary Napkins (I) Pvt. Ltd. - MANU/CB/0410/2004 : 2004 (174) ELT 220 (Tri.). Feeling aggrieved with the impugned order dated 16.08.2010, the appellants have preferred this appeal before the Tribunal.
2. The Learned Advocate appearing for the appellants submitted that since the appellants have inadvertently paid duty twice on transformer oil, taking of suo motto credit in the Cenvat account is proper and justified. In this context, he has relied upon the judgment of Hon'ble Karnataka High Court in the case of Commissioner of C.Ex., Bangalore - III Vs. Motorola India Pvt. Ltd. - MANU/KA/8619/2006 : 2006 (206) ELT 90 (Kar.). Further, he has submitted that in view of the said judgment of Hon'ble Karnataka High Court, the decision of Tribunal in case of Comfit Sanitary Napkins (supra) gets vitiated and as such, reliance placed on the said decision in the impugned order for allowing the appeal of Revenue is not sustainable. With regard to applicability of the ratio of judgment in the case of BDH Industries Ltd. (supra) to the facts of the present case, he has submitted that an appeal filed against the said judgment has been admitted by the Hon'ble Bombay High Court and as such, its precedential value is in jeopardy. The Learned Advocate also relied upon the following judgments delivered by the judicial forums, to state that taking of suo motto credit is a mere book adjustment and in absence of outflow of funds, filing of refund claim does not arise.
(i) Shree Rubbed Plast - 2015-TIOL-1285-CESTAT-MUM,
(ii) Balmer Lawrie and Co. Ltd. - 2014-TIOL-625-CESTAT-MUM,
(iii) NOCIL - 2014-TIOL-203-CESTAt-MUM,
(iv) ICMS Corporation Ltd. - MANU/TN/0053/2014 : 2014 (302) ELT 45 (Mad.),
(v) ICMS Corporation Ltd. - 2012-TIOL-1116-CESTAT-MAD,
(vi) Sopariwala Exports - MANU/CS/0034/2013 : 2013 (291) ELT 70 (T),
(vii) Krishna Engineering - MANU/UP/2600/2015 : 2016 (331) ELT 391 (All.),
(viii) S. Subrahmanyan & Co. - MANU/CS/0169/2011 : 2011 (268) ELT 497 (T), upheld by Hon'ble Gujarat High Court - 2013 (296) ELT A-123.
3. On the other hand, the Learned AR appearing for the Revenue has reiterated the findings recorded in the impugned order. He further submitted that Cenvat credit is equated with the duty of excise inasmuch as on removal of final product from the factory, option can be exercised by the assessee to discharge the duty liability either from the PLA or by debiting the Cenvat account. Thus, he submitted that the case of the appellants is governed by the provisions of Section 11B of the Central Excise Act, 1944 for filing of refund application, instead of taking suo motto credit. The Learned AR has relied upon the judgment of Hon'ble Supreme Court in the case of Mafatlal Industries (supra) and the Larger Bench decision of this Tribunal in the case of BDH Industries Ltd. (supra), to state that in absence of any provisions contained in the central excise statute, allowing the assessee to take suo motto credit, the only remedy available was for filing of refund application, which admittedly has not been complied with by the appellants. Thus, he contended that the impugned order passed by the Learned Commissioner (Appeals) is proper and justified.
4. Heard Shri Sachin Chitnis, Learned Advocate for the appellants and Shri N.N. Prabhudesai, Learned AR for Revenue. Perused the case records, including the synopsis filed by both sides.
5. Section 3 of the Central Excise Act, 1944 is the charging section, which determines a taxable event and also provides that the duty of excise, to be called as the Central Value Added Tax (CENVAT) shall be levied on all excisable goods produced or manufactured in India, in the prescribed manner. The manner of payment of duty has been prescribed in the Central Excise Rules, 2002 and the Cenvat Credit Rules, 2004. The said statutory provisions permit the manufacturer to pay the duty amount either from the Account Current (PLA) or the Cenvat Account. In so far as the Cenvat statute is concerned, Rule 3 of rules is the enabling provision, which entitles a manufacturer to take Cenvat credit of various duties and service tax paid on the inputs, capital goods and input services. Manner of utilisation of Cenvat credit is contained in sub-rule (4) of Rule 3, which inter alia provides that Cenvat credit may be utilised for payment of any duty of excise on any final product removed from the factory.
6. In this case, it is an admitted fact on record that the appellants had paid duty twice, once at the time of removal of transformer from the factory and subsequently on removal of the transformer oil. There is no statutory mandate for double payment of duty and in such cases, a manufacturer of excisable goods is permitted under the statute to claim refund of Central Excise duty paid in excess. Refund claim is governed under Section 11B ibid. The said statutory provision prescribes inter alia, the time limit for filing of refund application and fulfillment of the aspect of doctrine of unjust enrichment. The central excise statute does not provide any mechanism for taking of suo motto credit in the Cenvat account by the manufacturer. Since the issue involved in this case pertains to double payment of duty on transformer oil, the only recourse left to the appellants was to claim refund of the excess duty paid by it, in terms of Section 11B ibid, which admittedly has not been complied with by the appellants.
7. The Constitutional Bench of Hon'ble Supreme Court, in the case of Mafatlal Industries Ltd. (supra) have dealt with the situation, where the tax or duty is collected by the authorities under the Act by mis-construction or wrong interpretation of the statutory provisions. It has been held that in such type of case, the claim for refund arises under the provisions of the Act and a claim for refund is necessarily required to be preferred under the statutory enactment and before the authorities specified there under and within the period of limitation prescribed therein. It has further been held that the person claiming refund has to satisfy the authorities that the incidence of tax or duty has not been passed on to any other person and the same has been borne by it. In this case, since the appellants had paid the duty amount twice, though inadvertently, still the case is squarely governed under the provisions of Section 11B of the Act, as per the principles laid down by the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. (supra). Suo Motto adjustment of Cenvat account has no legal sanctity inasmuch as the issue of doctrine of unjust enrichment aspect cannot be ascertained by the authorities in such cases.
8. The applicants have also taken the stand that since they have availed suo motto credit within one year from the date of payment of the duty amount, such availment of credit should be treated as refund claim. We are of the considered view that such stand of the appellants are not legally tenable, for the reason that Section 11B of the Act clearly provides the modalities for filing of refund claim and entertaining of the same by the authorities. Since no formal refund application was filed, the case of the appellants is outside the scope and purview of Section 11B ibid.
9. The ratio of the above referred judgments relied upon by the appellants are not applicable to the facts of the case in hand inasmuch as the ratio laid down by the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. (supra) has not been considered by the judicial forums. Further, the Cenvat statute has also not mandated taking of suo motto credit, in the situation of payment of excess duty amount. Furthermore, the relied upon judgments dealt with the situation of adjustment/correction of wrong entry in the Cenvat account and not in context with payment of duty on removal of the excisable goods from the factory. Hence, those relied upon judgments are distinguishable from the facts and issue involved in the present case.
10. In view of the foregoing discussions and analysis, we do not find any infirmity in the impugned order passed by the Learned Commissioner (Appeals). Accordingly, appeal filed by the appellants is dismissed.
(Order pronounced in the open court on 04.06.2019)
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