2014 (11) TMI 1040 - AT - Central Excise

CENVAT credit on inputs which lost in fire as such denied - Held that - As per Rule 3(5B) of C.C.E which is reproduced here-in- under, the appellant is required to reverse the CENVAT credit on the inputs which have been written off in their books of accounts on account of fire or any other accidents. Therefore, hold that the appellant is required to reverse CENVAT credit on inputs which have been lost in fire as such . Further, as find in the claim of the appellant that certain inputs were not purchased by them against Central Excise invoices and they are not claiming CENVAT credit on them. This aspect has to be examined by the adjudicating authority hence, the matter; needs examination at the end of the adjudicating authority.

Summary

Issues:
Appeal against denial of CENVAT credit on inputs lost in fire.

Analysis:
1. Facts of the Case: A fire incident on 28-3-2010 destroyed various goods in the factory premises, leading to the appellant's claim for remission of duty on the lost goods. The focus is on whether the appellant can claim CENVAT credit on inputs lost in the fire.

2. Appellant's Contention: The appellant argues that there is no provision in law to reverse CENVAT credit on inputs lost in a fire. Citing the judgment in the case of Khurana Woolen Mills (P) Ltd. v. C.C.E, the appellant asserts that not all lost inputs were eligible for CENVAT credit as some were not purchased against commercial invoices. Therefore, the denial of CENVAT credit is unwarranted.

3. Revenue's Argument: The Revenue, represented by the learned A.R., points out that Rule 3(5B) of CENVAT Credit Rules, 2004 was amended in 2009. According to this rule, the appellant is obligated to reverse CENVAT credit on inputs destroyed in a fire. The Revenue contends that the Khurana Woolen Mills judgment is not applicable post the 2009 amendment.

4. Judgment and Decision: After hearing both parties and considering their arguments, the Tribunal refers to Rule 3(5B) of CENVAT Credit Rules, which mandates the reversal of CENVAT credit on inputs written off due to fire or accidents. The Tribunal holds that the appellant must reverse the CENVAT credit on inputs lost in the fire "as such." However, the issue of certain inputs not purchased against invoices and the appellant not claiming CENVAT credit on them requires further examination by the adjudicating authority. The matter is remanded for this specific purpose, with the issue of interest levy left open.

5. Conclusion: The appeal is disposed of with the direction for the adjudicating authority to review the appellant's claim regarding inputs not purchased against invoices. The judgment underscores the applicability of Rule 3(5B) in requiring the reversal of CENVAT credit on inputs lost in fire, while also emphasizing the need for a detailed examination of specific claims by the appellant.