2016 (12) TMI 970 - AT - Central Excise

Clandestine removal - Cenvat credit - Held that - attributable Cenvat Credit was reversed time to time and said intimation was recorded in RT-12 and nothing was hidden from the department. Further, there are large number of Ruling by appellate fora holding that reversal of Cenvat Credit amounts to non-availment of Cenvat Credit and since the Cenvat Credit was not availed, the question of recovery of 8% amount does not arise - appeal disposed off.

Summary

Issues:
- Appeal against Order-in-Appeal No.28/CE/APPL/NOIDA/07 dated 30.03.2007.
- Reversal of credit attributable to inputs used in the manufacture of exempted goods.
- Whether the demand is barred by limitation.

Analysis:

Issue 1: Appeal against Order-in-Appeal
The appellants, manufacturers of Air Conditioners and Chillers, availed Cenvat facility and were registered with the department. They cleared goods to defense organizations at Nil rate of duty under Notification No.64/95-CE dated 01.03.1995. The Revenue alleged that the goods were manufactured using Cenvat Credit availed inputs without maintaining separate accounts, leading to a demand notice. The Original Authority and Ld. Commissioner (Appeal) upheld the demand and penalty. The appellant appealed before the Tribunal, challenging the Orders-in-Original and Appeal. The Tribunal considered the contentions and found the show cause notice hit by limitation, thus setting aside the Orders-in-Original and Appeal, allowing the appeal.

Issue 2: Reversal of Credit
The appellants reversed the credit attributable to inputs used in the manufacture of exempted goods through various entries. They contended that the reversal was recorded in RT-12 returns, RG-23A part-II register, and PLA register, indicating non-availment of Cenvat Credit. They argued that numerous appellate rulings supported their position that reversal of credit amounts to non-availment. The show-cause notice issued beyond the normal limitation period was also challenged. The Ld. Counsel emphasized that the reversal was transparent and in compliance with regulations, and the retrospective application of Section 72 of the Finance Act, 2010, was relevant to their case.

Issue 3: Limitation of Demand
The Ld. Counsel argued that the show-cause notice was time-barred, beyond the normal limitation period. They highlighted that the reversal of Cenvat Credit was duly recorded in returns and registers, indicating compliance and non-availment of credit. The Tribunal acknowledged the arguments, finding the show cause notice unsustainable due to being hit by limitation. Consequently, both the Order-in-Original and Order-in-Appeal were set aside, and the appeal was allowed based on this ground.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the Orders-in-Original and Appeal due to the show cause notice being barred by limitation. The transparency in reversing credit and compliance with regulations played a crucial role in the decision, supported by relevant appellate rulings and the retrospective application of relevant provisions.