Excess credit reversed by assessee under protest during investigation with no SCN cannot be retained by Department

Excess credit reversed by assessee under protest in course of investigation, for which no SCN has been issued, cannot be retained by Department -Refund thereof is not hit by bar of unjust enrichment

In the instant case, during the course of investigation, Finolex Industries Ltd. (the Respondent) reversed Cenvat credit amounting to Rs. 29,22,631/- under protest. After completion of investigation, the Department issued SCN for denial of credit of Rs. 18,19,543/- only. Accordingly, the Respondent filed a refund claim before the Department for refund of excess amount of Rs.11,03,088/- paid by them but the same was rejected on ground of unjust enrichment.

The Hon’ble CESTAT, Mumbai held that the excess amount retained by the Revenue which was paid by the Respondent during the course of investigation under protest is without any authority of law. Therefore, the provisions of Section 11B of the Excise Act are not applicable. It was further held that in earlier round of litigation, the Commissioner (Appeals) held that excess amount paid by assessee during course of investigation under protest is not part of SCN and therefore same is without any authority of law and as the same has not been challenged by Revenue and the same has attained finality.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

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