Amount On Alleged Wrongly Availed Cenvat Credit Deposited At Instance Of Audit Team Liable To Be Refunded In Absence Of SCN: CESTAT
Mariya Paliwala
2 March 2022 12:21 PM IST
The New Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the amount on alleged wrongly availed Cenvat Credit deposited at the instance of the audit team is liable to be refunded in absence of Show Cause Notice (SCN). The bench of single member Rachna Gupta (Judicial Member) has noted that the payment made by the assessee at the time of audit,...
The New Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the amount on alleged wrongly availed Cenvat Credit deposited at the instance of the audit team is liable to be refunded in absence of Show Cause Notice (SCN).
The bench of single member Rachna Gupta (Judicial Member) has noted that the payment made by the assessee at the time of audit, in absence of any SCN for the same, cannot be held to be the payment against the demand raised by the Department without even going into the merits of the nature of demand.
The assessee has been engaged in manufacturing of various types of speakers, who after receiving a purchase order from their customer used to sell and supply/deliver those speakers at the site of the respective customers.
During an audit conducted by the Department of the assessee's record, it was observed that the assessee has wrongly availed Cenvat Credit on account of service tax paid on outward freight as well as on a missing invoice.
However, after agreeing to the objections of the audit, the assessee deposited an amount. The said sum included the credit taken, interest and penalty. Later the assessee filed the refund claim for the said amount. However, vide SCN it was observed based on the audit report that on being pointed out by the Audit Team, party or assessee agreed with the audit objection and deposited the amount. Hence, no occasion of refund arises. Accordingly, the claim was proposed to be rejected vide the aforesaid SCN.
The counsel for the assessee has mentioned that the assessee had rightly claimed the Cenvat credit of the service tax paid by him on the transportation charges, the sales by him being on FOR basis.
It has been further added that the missing invoice was later found. Hence, the assessee was entitled for taking Cenvat Credit thereupon. The amount of duty as was obtained by the Officers at the time of duty, accordingly, was prayed to be refunded. The rejection of refund is, therefore, impressed upon as illegal and against the procedure of the law.
On the other hand, Counsel appearing for the respondent has submitted that the assessee had voluntarily made the payment of discharging his duty liability. No sooner was it pointed out by the Audit team. Hence, the payment, the refund whereof has been claimed, was not the payment under protest but was the voluntary payment. The objections pointed out by the Audit Team were otherwise genuine.
The tribunal held that the mandate of section 11A of CEA and the absence of the requisite SCN the amount deposited at the instance of the audit team is liable to be refunded to the assessee. Whenever an amount is to be refunded in terms of section 11AA, 11BB, 11DD and 11AB of the Excise Act, an interest at the rate which varies from 6% to 18% has to be granted.
Case Title: M/S Bird Audio Electronics Versus Commissioner Of CGST, North Delhi CGST Commissionerate
Citation: Excise Appeal No. 51056 Of 2021
Counsel For The Petitioner: Advocate Parth Mullick
Counsel For The Respondent: Advocate Mahesh Bhardwaj
