2015 (3) TMI 1092 - AT - Central Excise

Reversal of differential amount of Cenvat credit availed on the capital goods which was received and subsequently removed from the factory of the appellant - Bar of limitation - Held that - On perusal of the ER1 for the month in July 2007, I find that the appellant had clearly indicated as Credit utilised when inputs or capital goods are removed as such ; I find that at page 43, of the same ER1 appellant had indicated During the month, invoices bearing Sr.no. 141 to 225 were issued. On perusal of the invoices, under which the capital goods were removed, I find that the capital goods were removed under invoice nos. 181 to 185. This factual matrix has been appreciated by the first appellate authority in his Order-in-Appeal when he set aside the penalties imposed by the Adjudicating Authority under the provisions of Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - If there is no clandestine removal, the question of invoking the extended period and confirming the said demand cannot arise - demand confirmed against the appellant is barred by limitation and liable to be set aside - Decided in favour of assessee.

Summary

Issues involved:
Reversal of differential amount of Cenvat credit availed on capital goods removed from the factory.

Detailed Analysis:
1. Issue of Reversal of Cenvat Credit: The appellant was alleged to have availed excess Cenvat credit on capital goods and subsequently removed them from the factory. The revenue claimed that the appellant reversed a portion of the credit by valuing the goods at a lower price, leading to a differential amount of credit availed. Both lower authorities confirmed the liability to reverse the credit along with interest, while penalties imposed were set aside by the first appellate authority.

2. Contention on Limitation: The appellant contested the issue on limitation, arguing that the clearance of capital goods was duly reported in the ER1 return without any clandestine removal. The appellant relied on previous tribunal decisions to support the argument that if penalties were set aside due to no clandestine removal, the demand would fail automatically. On the other hand, the Departmental Representative contended that the appellant failed to forward the invoice with returns, leading to the error being noticed during an audit, prompting the reversal of Cenvat credit.

3. Observations on Limitation: Upon reviewing the records, it was found that the appellant had indicated the credit utilization when the capital goods were removed in the ER1 for July 2007. The invoices for the removal of capital goods were also duly recorded. The first appellate authority acknowledged that there was no clandestine removal as the goods were cleared under Central Excise invoices with duty payment, as reflected in the monthly returns. This factual finding was undisputed by the revenue, indicating no basis for invoking the extended period and confirming the demand.

4. Application of Precedents: The Tribunal referred to previous judgments to support the finding that the demand was barred by limitation. Citing the case of CCE vs. Digvijay Polytex P. Ltd., it was concluded that since the appellant had intimated the duty payment particulars in the monthly return, the allegation of suppression of facts could not be substantiated, resulting in the demand being time-barred. Consequently, the demand against the appellant was set aside as it was found to be barred by limitation.

5. Conclusion and Relief: The impugned order was set aside to the extent appealed against, and the appeal was allowed with any consequential relief. The judgment highlighted the importance of timely reporting and compliance with procedural requirements to avoid issues of limitation in such matters.

This detailed analysis of the judgment emphasizes the significance of procedural compliance, timely reporting, and the impact of previous tribunal decisions on similar issues related to Cenvat credit reversal on capital goods.