Recently, Honble Ahmedabad CESTAT in the matter of Garden Silk Mills Ltd. vs. Comm. of Central Excise & Service Tax, Surat, (2016) 65 taxmann.com
101 (Ahmedabad-CESTAT),has held that payment of duty, pending adjudication of case, using the CENVAT credit balance appearing in books of account, is a payment of duty and not a deposit, hence suo motu credit of said payment cannot be taken afterwards and same has to be claimed as refund u/s 11B of the Central Excise Act, 1944.
In the instant case, appellants paid Rs. 26 crores by way of CCR against demand raised in two show cause notices issued upon them with a purpose to avoid future liability in case demands were confirmed against them in adjudication proceedings.
However, after one year, even though the show cause notices were in adjudication, appellant decided that this payment is not warranted and therefore took credit of the amount of duty paid in RG 23A Part-II and which amount was also utilized by the assesse for payment of duty in the ordinary course of business. Later on, two show cause notices initially issued demanding duty and the consequent order of adjudicating authority were subsequently set aside by the Tribunal.
Department objects to it and issued SCN as according them there is no such provision for taking suo- motu credit and they were not legally empowered to do so.
In this regard, CESTAT was also of the view that impugned payment by assesse cant be said as a deposit and is a payment of duty in itself therefore said payment can not be taken as suo motu credit same has to be claimed as refund under section 11B.