2011 (3) TMI 1363 - HC - Central Excise

Cenvat credit - demand of duty - Tribunal set aside the Duties on the ground that, the assessee has not availed Cenvat credit in respect of the work in progress - assessee had shown the work in progress in the balance sheets which is duly certified by the Chartered Accountant - assessee opted for exemption under the SSI scheme - correspondingly on Cenvat credit was availed as factually there was no work in progress - Tribunal considering all the material on record has recorded a categorical finding of fact that there is no evidence that there was no work in progress - no allegation that the assessee had utilized the so called credit attributable to the work in progress and the question of reversing the same would not arise, order set aside, questions of the law framed are answered in favour of the assessee and against the revenue

Summary

Issues:
1. Delay in filing the appeal.
2. Availment of Cenvat credit in respect of work in progress.
3. Reversal of Cenvat credit when opting for SSI exemption.
4. Interpretation of "inputs lying in stock."

Issue 1: Delay in filing the appeal
The judgment addresses a delay of 5 days in preferring CEA No. 23/2009. The delay is condoned based on the cause shown in the affidavit for condonation of delay, and Misc. Civil No. 2311/2009 is allowed.

Issue 2: Availment of Cenvat credit in respect of work in progress
The Tribunal set aside the duties imposed by the Revenue, stating that the assessee did not avail Cenvat credit for work in progress, despite showing it in the balance sheet certified by a Chartered Accountant. The assessee argued that there was no actual work in progress, and the entry was made to present a favorable financial image. The Tribunal agreed, emphasizing that without evidence of work in progress or utilization of the credit, there was no basis for demanding duties. The Tribunal's decision was upheld, and the appeal by the Revenue was dismissed.

Issue 3: Reversal of Cenvat credit when opting for SSI exemption
The assessee transitioned to full exemption under the SSI scheme but did not reverse the Cenvat credit related to the alleged work in progress. The Tribunal found no evidence of actual work in progress or utilization of the credit, leading to the conclusion that no reversal was necessary. The Tribunal's decision was supported, and the order demanding duties and penalty was set aside.

Issue 4: Interpretation of "inputs lying in stock"
The Tribunal found that the assessee did not avail Cenvat credit for inputs in work in progress, as there was no actual work in progress. The Tribunal's decision was based on the absence of evidence supporting the availment or utilization of the credit related to work in progress. The substantial questions of law were answered in favor of the assessee, rejecting the Revenue's contentions and upholding the Tribunal's decision.