2014 (10) TMI 556 - AT - Central Excise

Reversal of CENVAT Credit - Assessee contends that excess amount of Cenvat Credit reversed by the appellant, where lesser Cenvat Credit was required to be reversed at the time of clearance of inputs as such, is required to be adjusted while calculating the correct demand of reversal of Cenvat Credit - Held that - On the issue of reversal of Cenvat on inputs at the time of their clearance as such appellant is not agitating the issue on merits. However, it is the case of the appellant that excess Cenvat Credit reversed by the appellant should be adjusted against the short payment made. Prima facie, there is substance in the argument made by the A.R. that getting refund of excess Cenvat Credit reversal on cenvatable invoices is a separate proceedings and cannot be adjusted against short reversal. Appellant has, therefore, not made out a case for waiver of interest with respect to the confirmed demands and are required to be put to certain conditions. Accordingly, appellant is directed to deposit an amount of ₹ 60,000/- within eight weeks - Partial stay granted.

Summary

Issues involved: Stay application for reversing Cenvat Credit on inputs at the time of clearance, adjustment of excess Cenvat Credit, refund claims for excess Cenvat Credit, interest on short payments.

Analysis:

The appellant filed a stay application to suspend the operation of an Order-in-Appeal related to the reversal of Cenvat Credit on inputs cleared as such under the Cenvat Credit Rules, 2004. The primary contention raised by the appellant was that they had already reversed a significant portion of the Cenvat Credit, and the excess amount reversed should be adjusted against the correct demand for reversal. The appellant's representative argued that the excess Cenvat Credit amount should be considered while calculating the correct demand for reversal, as they had already reversed an amount exceeding the required credit. On the other hand, the revenue's representative contended that as per the Cenvat Credit Rules, the appellant was obligated to reverse the equivalent Cenvat Credit taken for inputs cleared as such. Additionally, it was highlighted that separate refund claims were necessary for excess Cenvat Credit paid on cenvatable invoices, and interest was payable on any short payments made.

Upon hearing both sides and examining the case records, the Tribunal acknowledged that the appellant was not disputing the need for reversing Cenvat on inputs at the time of clearance. However, the Tribunal noted that the issue was whether the excess Cenvat Credit already reversed by the appellant could be adjusted against any short payments made. The Tribunal found merit in the revenue's argument that obtaining a refund for excess Cenvat Credit on cenvatable invoices was a distinct process and could not be offset against short reversal amounts. Consequently, the Tribunal ruled that the appellant had not sufficiently demonstrated a case for waiving interest on the confirmed demands. As a result, the Tribunal directed the appellant to deposit a specific amount within a specified timeframe and report compliance accordingly. Subject to this payment, the Tribunal granted a stay on the recovery of the remaining amounts pending the appeal's final disposal.