ORDER
M.V. Ravindran, Member (J)
1. This appeal is directed against order in appeal dated 03/11/2003 which upheld the order in original confirming the demand and imposing penalty and interest.
2. The relevant fact that arise for consideration are appellants availed modvat credit initially on the invoices issued by their suppliers in respect of brass tube. The audit party when auditing the records of the appellant came to the conclusion that the credit availed by the appellant to the tune of Rs. 91,257/- (Rupees Ninety One Thousand Two Hundred Fifty Seven only) is ineligible on the ground that the brass tube which were received back were manufactured by the job worker from the brass scrap supplied by appellant and the appellants have not followed the procedure for removal of the brass scrap from their factory. The appellants reversed the modvat credit of Rs. 91,347/-(Rupees Nine One Thousand Three Hundred Forty Seven only) under protest’ on 01/07/99. Subsequently on 07/07/99, the appellants re-credited the modvat credit suo-moto. The revenue issued a show cause notice to the appellant for recovery of this suo moto credit availed by the appellant. Adjudicating authority confirmed the demand and also imposed penalty and directed to pay interest on the said amount. On an appeal, Commissioner (Appeal) also took identical view.
3. The learned advocate appearing for the appellant submits that debit of the duty on 01/07/99 by the appellant was in itself under protest and not required to be done. It is his submission that the revenue has not issued any show cause notice or confirmed the demand of the amount of Rs. 91,347/- (Rupees Ninety One Thousand Three Hundred Forty Seven only) in the absence of any such demand, the amount reversed by them on 01/07/99 is not required to be paid to the revenue. The reversal of modvat credit, as such, is not wrong and if they are eligible to take modvat credit. He relies upon the judgment of the Tribunal in the case of Commissioner of Central Excise, Surat v. Trinetra Texturisers Pvt. Ltd. as reported at 2004 (166) E.L.T. (384) (Tri. – Mumbai) and on the case, law of Kopran Ltd. v. Commissioner of Central Excise, Raigad as reported at 2006 (196) (E.L.T. (99) (Tri. – Mumbai).
4. On the other hand, the learned DR submits that the appellant is totally wrong in taking the re-credit, suo moto. It is his submission that the appellant should have, if aggrieved by debits made by him, should have preferred refund claim as per law. He submits that this issue is squarely covered by the decision of the Tribunal in the case of Medicamen Biotech Ltd. v. CCE, Jaipur-I as reported at 2003 (57) R.L.T. (160) (CEGAT – Del.) and in the case of Mittal Steel Ltd. v. Collector of Central Excise, Bangalore as reported at . It is his submission that if the appellants had filed the refund claim, he could have got the refund from the department. Since the issue involved in this case is only regarding availing of suo moto credit nothing else should be gone into.
5. Considered the submissions made by both sides and perused records. I find from the records that the appellants reversed the amount of Rs. 91,347/- (Rupees Ninety One Thousand Three Hundred Forty Seven only) on 01/07/99 ‘under protest’. This reversal was not at all attributed for any specific reason. Subsequently, the appellant while availing the suo moto re-credit indicated in RG 23A Part ‘II’ that, “no show cause notice is received from competent authority, no reversal is legal and therefore credit entry is being passed for reversal of the entry made as above.” The genesis of the problem in this case has arisen from the fact that the appellants were directed to reverse the amount of credit by the audit party without issuing any show cause notice, which was based on the audit of the records of appellant. I find from the records that even today, the said demand is not confirmed by any lower authority by issuance of any show cause notice to the appellant. Further, the show cause notice which seeks the amount of re-credit taken by the appellants, specifically does not allege as to why this amount was initially sought to be reversed from the appellant. I find from the show cause notice that the audit party came to the conclusion that appellant had not paid duty on the brass scrap sent out for making into brass tube, if that be so, then the amount of Rs. 91,347/- (Rupees Ninety One Thousand Three Hundred Forty Seven only) could indicate the demand of duty on the brass scrap so removed by the appellant, but the amount sought to be reversed by the audit party seem to be the modvat credit which the appellant availed against valid duty paying documents. It seems that the amount sought to be reversed by the department originally (in audit observation) is not attributable to the non-eligibility of the modvat credit but is for the demand of the duty on the brass scrap removed, if so, to my mind department has not made out any justifiable cause for retaining the amount of Rs. 91,347/-(Rupees Ninety One Thousand Three Hundred Forty Seven only) when there is no confirmed demand and the same was reversed by the appellant under pressure. As regards, the case laws relied upon by the learned DR. I find that in the case of Mittal Steel Ltd. (Supra), the Tribunal came to the conclusion that suo moto reversal is not correct from the fact of that case that the appellant in that case had availed modvat credit, which was admittedly not legal and correct, hence, subsequent suo moto reversal was held to be not correct. In the case of Medicamen Biotech Ltd. (Supra) relied upon by the learned DR, issue was that the appellant had taken modvat credit without any duty paying document, which they could not do so and reversed the modvat credit, but subsequently took suo moto credit. The ratio of the both the cases laws cited by the learned DR would be that if the appellant is not eligible for the modvat credit in the initial stages, then the subsequent suo moto credit would be incorrect.
6. As against that, the judgment and order of the Tribunal in the case of Trinetra Texturisers Pvt. Ltd. (Supra) directly deals with the issue. The Tribunal in its order and judgment at paragraph ‘4’ has held as under:
Besides the basic ground in the appeal that the respondents have taken a suo moto credit itself is a misstatement in as much as the credit taken was only to restore the actual credit available on the basis of duty paying documents and there was no effort to take credit in excess of the credit mentioned in the duty paying documents. The colour and thrust of the appeals of the Revenue being totally misleading and without having support of law, the same are rejected.
7. I find that in this case, the appellants were eligible for modvat credit at the first instance, as they had the duty paying documents and they had received the brass tube on which the duty was paid. Since the initial availment of credit in this case is undisputable and initial reversal done by appellant was under wrong interpretation of audit party, the subsequent suo moto credit by the appellant is squarely covered by the ratio of the Tribunal, in the case of Trinetra Texturisers Pvt. Ltd.
8. Accordingly, in the facts and circumstances of the case, the impugned order is liable to be set aside and I do so. Appeal allowed.
(Dictated and pronounced in the open court)