2014 (2) TMI 724 - AT - Central Excise

Removal of Inputs as such - reversal of cenvat credit under Rule 3(5) - Recovery of service tax - Held that - Rule 3(5) of Cenvat credit Rules, 2004 not indicates for payment of equal amount in respect of credit on input service - Well settled that while interpreting statute no addition or subtraction can be made and words therein be given their plain meaning- No provision for payment of credit on input service- Reversal of credit in respect of GTA service not justified - no reasons to interfere in the impugned order of Commissioner (Appeals) - Following decision of Bansal Alloys & Metals vs. CCE 2009 (9) TMI 514 - CESTAT, NEW DELHI - Decided against Revenue.

Summary

Issues:
- Whether the appellant is required to reverse Cenvat credit on the quantity of barley thin sold by them.
- Applicability of Rule 3(5) of the Cenvat Credit Rules, 2004 on the input service credit availed by the appellants.
- Interpretation of relevant case laws by the Commissioner (Appeals) and the Tribunal.
- Challenge to the Tribunal decision in the case of Bansal Alloys & Metals Pvt. Ltd.

Analysis:
1. The main issue in this case is whether the appellant is obligated to reverse Cenvat credit on the quantity of barley thin sold by them. The Department contended that since the barley thin was not used in the manufacture of finished goods, the appellant must reverse an equivalent amount of Cenvat credit taken on the quantity of barley thin sold. The Commissioner (Appeals) disagreed with this argument, stating that the thin barley, left as a remnant material, cannot be considered as the removal of input. The Commissioner relied on the Tribunal decisions in similar cases to support this interpretation.

2. Another issue raised is the applicability of Rule 3(5) of the Cenvat Credit Rules, 2004 on the input service credit availed by the appellants. The Commissioner noted that there is no provision in the rule to reverse credit of service tax availed in relation to inputs or capital goods when removed from the factory. The Commissioner cited relevant Tribunal decisions, such as Chitrakoot Steel & Power Pvt. Ltd. vs. CCE, to support this interpretation.

3. The Commissioner (Appeals) extensively analyzed and interpreted relevant case laws to support the decision in favor of the respondent. The Commissioner referenced the Tribunal decisions in the cases of CCE vs. Roll Tubes Ltd., CCE vs. Quality Steel Tubes Ltd., and Bansal Alloys & Metals vs. CCE to establish the legal principles governing the reversal of Cenvat credit in similar situations. The Commissioner concluded that based on the settled law, the appellants were not required to reverse the credit of service tax availed in relation to the inputs.

4. The revenue challenged the Tribunal decision in the case of Bansal Alloys & Metals Pvt. Ltd. before the Hon'ble Punjab & Haryana High Court. However, the Commissioner found no reason to deviate from the decision based on the challenge alone, as there was no stay of operation or reversal of the said order by a higher appellate court. The Commissioner also addressed the revenue's argument regarding the Tribunal decision in the case of Chitrakoot Steel & Power Pvt. Ltd., emphasizing that the law declared in that case was applicable to the facts of the present appeal. Consequently, the Commissioner rejected both appeals filed by the revenue, upholding the decision of the Commissioner (Appeals).