2017 (6) TMI 48 - AT - Central Excise

CENVAT credit - recovery of credit on inputs written-off in the books of accounts - Held that - the issue has been considered by the Hon ble Gujarat High Court in the case of Ingersoll Rand (India) Ltd. 2013 (2) TMI 32 - GUJARAT HIGH COURT where analyzing the Circulars issued by the CBEC dated 22.2.1995 and 16.7.2002 and the relevant Rules it was held that Merely because the value of goods diminished in the books of accounts of the assessee would not by itself permit the Department to insist on reversal of the credit particularly when such goods were still available in the factory in usable condition - appeal allowed - decided in favor of appellant.

Summary

Issues:
Recovery of CENVAT credit on inputs written-off prior to amendment of CENVAT Credit Rules.

Analysis:
The case involved an appeal against an Order-in-Appeal passed by the Commissioner (Appeals), Central Excise, Customs & Service Tax, Vadodara. The appellant was alleged to have written off inventory/stock worth a certain amount, with a portion involving CENVAT credit. The demand was confirmed with interest and penalty. The appellant contended that the recovery of CENVAT credit on inputs written-off before the amendment of the CENVAT Credit Rules was covered by a judgment of the Hon'ble Gujarat High Court in the case of C.C.E. Vs. Ingersoll Rand (India) Ltd. The Revenue, represented by the Advocate, reiterated the findings of the Commissioner (Appeals).

The Tribunal noted that the issue had been considered by the Hon'ble Gujarat High Court in the case of Ingersoll Rand (India) Ltd. The High Court observed that the Circulars issued by the CBEC could not create a liability that did not exist under the rules. The Court highlighted the amendment in the rules introducing provisions for the reversal of CENVAT credit under specific circumstances. It was emphasized that in the absence of such statutory provisions, the Department could not enforce the reversal of CENVAT credit solely based on Circulars. The Court referred to the statutory provisions and the evolution of the rules governing CENVAT credit. Based on the settled principle of law by the jurisdictional High Court, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief as per law.

In conclusion, the judgment addressed the recovery of CENVAT credit on inputs written-off before the amendment of the CENVAT Credit Rules. The Tribunal relied on the interpretation and application of statutory provisions and the precedents set by the Hon'ble Gujarat High Court to decide in favor of the appellant, emphasizing the necessity of specific statutory provisions for enforcing the reversal of CENVAT credit.