2017 (1) TMI 354 - AT - Central Excise

Reversal of credit - Rule 11(2) of Cenvat Credit Rules, 2004 - Held that - the respondent has, after reversing the amount of ₹ 28,157/- on 23-2-2006, deposited the balance amount through PLA on 11-4-2006. This would mean that the respondent has reversed the entire amount of Cenvat credit attributable to the inputs lying in stock as on 31-3-2006 albeit belatedly, for which, the Department could have charged interest on the respondent. Since in the facts and circumstances of this case, the amount of Cenvat credit availed on the inputs lying in stock as on 31-3-2006 stands reversed, we do not find any merit in the appeal filed by the Revenue - appeal rejected - decided against Revenue.

Summary

Issues:
Demand of duty on clearances claiming exemption under Notification No. 8/2003-C.E.

Analysis:
The appeal was filed by the Revenue against an order-in-appeal regarding the demand of duty on clearances by the respondent claiming exemption under Notification No. 8/2003-C.E. The Revenue argued that the respondent should have paid duty on inputs lying in stock as of 31-3-2006, which they claimed was not done adequately. The Revenue contended that the respondent violated Rule 11(2) of Cenvat Credit Rules, 2004, leading to duty liability on clearances from 1-4-2006.

Upon review, the Tribunal found that the Revenue's arguments were not valid as appreciated by the First Appellate Authority. The respondent had indeed reversed the amount of Cenvat credit on 23-2-2006 and later deposited the balance through PLA on 11-4-2006. Despite the delay, the respondent eventually reversed the entire Cenvat credit linked to the inputs in stock as of 31-3-2006. The Tribunal noted that the Department could have charged interest for the delay, but since the Cenvat credit was eventually reversed, the appeal lacked merit.

The Tribunal emphasized that Rule 11(2) requires the reversal of Cenvat credit on the date the assessee seeks the benefit of the exemption under Notification No. 8/2003-C.E. In this case, as the Cenvat credit was reversed, the Tribunal found no grounds to support the Revenue's appeal. Consequently, the appeal filed by the Revenue was rejected, affirming the decision in favor of the respondent.

This judgment highlights the importance of complying with Cenvat credit rules and the specific requirements for claiming exemptions under relevant notifications. It also underscores the significance of timely actions and reversals to avoid duty liabilities and potential interest charges.