2017 (4) TMI 381 - AT - Central Excise

CENVAT credit - inputs written off - appellant claim that as per sub-rule (5B) of Rule 3 of the CCR, 2004, the credit is required to be reversed only in case where the CENVAT Credit in respect of inputs has been taken as written off and shown in the Books of Account, but if the inputs were subsequently used in the manufacture then the credit is admissible - whether the CENVAT Credit in respect of inputs and its value shown in the Books of Account as written off is required to be reversed or otherwise? - Held that - even for the period prior to insertion of sub-rule (5B) of Rule 3 of the CCR, 2004, this Tribunal in the appellant s own case 2012 (11) TMI 294 - CESTAT, MUMBAI , decided the issue against them and according to the said decision, the appellant is required to reverse the credit on the written off quantity. Extended period of limitation - Held that - Once, the Tribunal decided the issue against them, it is more reason for the appellant to inform to the Department if they continue the practice of showing the written off quantity in the Balance sheet and not reversing the CENVAT Credit thereon. As per this conduct of the appellant, it is clear case of suppression of facts, therefore, extended period was rightly invoked by the Department - extended period invoked. Penalty u/s 11AC also consequently imposable. Appeal dismissed - decided against assessee.

Summary

Issues:
Whether CENVAT Credit in respect of inputs shown as written off in the Books of Account is required to be reversed or not.

Analysis:
The appellant argued that the credit should not be reversed as the inputs were used in manufacturing despite being written off due to an accounting error. They also contended that the demand for the extended period is time-barred. The appellant relied on various judgments to support their arguments. However, the Revenue maintained that the credit should be reversed based on previous Tribunal decisions, even before the insertion of sub-rule (5B). They argued that there was suppression of facts by the appellant, justifying the invocation of the extended period. The Revenue cited several judgments to support their stance.

The Tribunal found that even before the insertion of sub-rule (5B), the appellant was required to reverse the credit on the written-off quantity based on previous Tribunal decisions. The Tribunal held that the appellant's argument regarding the change in law due to Supreme Court decisions was not valid, as the facts and circumstances of the case remained the same. The Tribunal referred to specific findings from the previous Tribunal decision in the appellant's case, emphasizing the need to reverse the credit on inputs written off from the Books of Account.

Regarding the limitation issue, the Tribunal agreed with the Revenue that the quantity shown as written off in the Balance sheet is based on factual circumstances, not a legal point. The Tribunal concluded that the appellant's conduct of not informing the Department about the written-off quantity and not reversing the CENVAT Credit constituted suppression of facts, justifying the invocation of the extended period and imposition of penalty under Section 11AC. Consequently, the Tribunal upheld the impugned orders and dismissed the appeals.

In summary, the Tribunal held that the appellant was required to reverse the CENVAT Credit on inputs written off from the Books of Account, even before the insertion of sub-rule (5B). The Tribunal rejected the appellant's arguments regarding the change in law and upheld the Revenue's stance on the suppression of facts, leading to the invocation of the extended period and penalty imposition.