CE - CENVAT Credit - High Court allows suomotu credit
SUPPOSE by mistake, you debit the duty twice in your CENVAT account or you make an excess payment, which you realise after some time. What do you do? Take credit of the wrongly debited amount. Well, that is simple accounting which your auditor may approve, but your Central Excise Officer will frown and his frown will result in a Show Cause Notice which will take you through the great maze of Indian tax litigation and God alone knows where and when and how it will end.
The Larger Bench of the CESTAT had in BDH Industries case reported in 2008-TIOL-1211-CESTAT-MUM-LB observed, "there is no provision under Central Excise Act and Rules allowing suomoto taking of credit of refund without sanction by the proper officer. The appellant's contention that refund in respect of duty paid twice cannot be considered as refund of duty and is only the accounting error does not appeal to us as the debit entry made in the accounts is towards payment of duty only and therefore refund of these amounts has to be considered as refund of duty only. The PLA account and the credit accounts are required to be submitted to the department and any correction carried therein, need to have department's sanction.".
And since then, the Department is totally against allowing any suomotu credit of any amount and insists that one has to go through the refund procedure and even prove that there was no unjust enrichment.
In such a scenario, comes a refreshingly welcome order from a High Court which has upheld suomotu credit taken by the assessee.
You will have to wait till tomorrow for the judgement.