Judgment:
2. The assessee is in appeal aggrieved by Order-in-Appeal passed by the Commissioner (Appeals), Central Excise, Mumbai-III, who has disallowed the Modvat credit to the tune of Rs. 1,10,910.16 (Rupees One Lakhs Ten Thousand Nine Hundred Ten and Paise Sixteen only) availed by the asseee.
3. The appellants were inter alia engaged in processing of goods on job work basis which were cleared without payment of duty. They were availing credit of duty paid on furnace oil and were reversing the credit on the furnace oil used in processing of goods cleared without payment of duty. By a letter dated 19-02-2003, the appellants have informed the Department that in view of the CEGAT judgment in the case of Shakti Industrial Wires 2002 (51) RLT 115 and Indore Steel & Iron Mills Ltd. 2002 (51) RLT 174 (Tri.), therein they were not required to reverse any credit and took back the credit of Rs. 1,10,910.16 (Rupees One Lakhs Ten Thousand Nine Hundred Ten and paise Sixteen only) and later utilized the same for payment of duty on other items.
4. The Asst. Commissioner, Central Excise, Wagle Divn., Mumbai-Ill Commissionerate on adjudication of the Show-Cause-Notice, confirmed the demand and order the recovery of Cenvat credit while imposition of equal amount of penalty and interest. On filing of appeal by the assessee, the Commissioner (A), Central Excise, Mumbai while confirming the payment of duty, rejected the appeal filed by the assessee. It is contended by the appellants before the Commissioner (A) that the applicability of Cenvat Rule 6(2) to the furnace oil was not clear and not guided properly by the department as such voluntarily reversed the credit on furnace oil used for job work. Further, it is contended that though came know to the correct legal position in February 2003 as such they took back the credit and informed the Department. The Id. Commr.
(A) ultimately upheld that suo motu taking credit without any direction or permission can not be justified and a proper refund claim was required to be followed. Observing the same, the Commissioner (A) upheld the impugned order and rejected the appeal.
5. The Id. counsel for the appellants contends that under Section 11B of Central Excise Act, the procedure is laid down for making refund claim when the amount is in deposit which has been collected from the assessee and incidence of the duty not passed on to any other person, he is entitled for refund claim. This procedure can not be followed in the instant case as it pertains to reversal of credit which has been erroneously done without knowing the legal position. It is only a adjustment of amount. The credit has been voluntarily reversed and later it was taken back credit and that any formal permission is required since the matter has already been informed to the Department.Maruti Foam Pvt.
Ltd. v. CCE, Meerut and came to such a conclusion.
The facts in the case are distinguishable as confirmed demand was taken credit in PLA invoices and utilised payment of Excise duty under Rule 9(2) of Central Excise read with Section 11A of Central Excise Act, 1944. Further there was a confirmation of payment of certain amount which was taken credit in RG 23A Part II (under Rule 57-A) of the Central Excise Rules. After considering the facts and circumstances of the case, and various contentions raised by the Id. Counsel for the appellants, mere because the credit is taken suo motu by adjustment in the RG 23A Part II which has been reversed earlier being under wrong impression for want of legal knowledge, the same can not be denied as it was taken suo motu after intimation. Therefore, I am of the view that the finding of both the authorities being erroneous the same is set aside, accordingly, I set aside and allowed the appeal filed by the assessee. In the result, appeal is allowed.