2017 (5) TMI 559 - AT - Central Excise

Reversal of CENVAT credit - write-off of inputs - sub rule 5(b) of Rule 3 of CCR w.e.f. 7-9-2007 - present case period involved is March, 2001 to February, 2002 - Held that - the demand of Cenvat credit of ₹ 15,74,811/- is not on account of quantity written off in the books of account as in fact there is no quantity shown as written off in the books of accounts - Demand was confirmed on the quantity of inputs cleared for spares parts sale and the same was quantified and informed to the department by the appellant themselves in such case the demand was correctly confirmed. As regard the limitation, the appellant though have transferred certain quantity of inputs for spare parts sale in respect of which credit cannot be retained by the appellant but was not disclosed to the department therefore clear suppression of facts established on the part of the appellant - invocation of extended period justified. Appeal dismissed - decided against appellant.

Summary

Issues:
Demand of Cenvat credit based on input written off in books of accounts, applicability of Rule 3 of Cenvat Credit Rules, time-barred demand, suppression of facts, admissibility of credit on spare parts sale.

Analysis:
The case involved a demand for Cenvat Credit on inputs believed to have been written off in the books of accounts. The appellant debited duty on the quantity of input transferred to their spare parts division, which led to a show cause notice for demanding the same amount of Cenvat credit. The adjudicating authority confirmed the demand, along with interest and penalty. The appellant challenged the Order-in-Original before the Commissioner(Appeals) but was rejected, leading to the appeal before the Tribunal.

The appellant argued that the demand was not sustainable as the provision for reversal of Cenvat credit on written off quantity came into effect post the period in question. They contended that the demand was time-barred and not based on suppression of facts. The appellant cited various judgments to support their case.

On the other hand, the Revenue reiterated the findings of the impugned order, emphasizing that even for the period before the relevant rule, credit on written off quantity needed to be reversed if not used in the final product manufacture. They argued that the quantity cleared for spare parts sale was not admissible for credit.

After considering the submissions, the Tribunal found that the demand was not based on the quantity written off in the books of accounts. The demand was upheld due to the quantities cleared for spare parts sale, which the appellant themselves quantified and informed to the department. The Tribunal noted a clear suppression of facts regarding the transfer of inputs for spare parts sale, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the impugned order, dismissing the appeal and pronouncing the judgment on 26/04/2017.