2017 (7) TMI 161 - AT - Central Excise

CENVAT credit - non-return of Capital goods sent to job-worker under the cover of challan issued u/r 4 (5) (a) of the CCR, 2004, within 180 days - Held that - Even though no evidence is available on record to show that the period of 180 days is expired from the date of sending the capital goods to the job-worker, as per the challan produced by the learned Counsel, it is clear that when the appellants have paid the duty within 180 days from the date of issue of challan was not expired. In these circumstances, this particular matter needs to be re-verified - matter on remand. Reversal of CENVAT credit - obsolete input - Held that - since the input was subsequently removed from the factory as a scrap, the CENVAT Credit is required to be reversed. Penalty - Held that - It is also observed that the appellants have paid the duty along with interest. In these circumstances, there is no reason to impose penalty commensurate to the CENVAT amount in respect of written off quantity of inputs - Penalty set aside. Appeal allowed - decided partly in favor of assessee, partly against assessee and part matter on remand.

Summary

Issues:
1. Demand of duty for non-return of capital goods within 180 days sent for job work under Rule 4 (5) (a) of the Cenvat Credit Rules, 2004.
2. Denial of Cenvat Credit related to written off value of inputs in the books of accounts and imposition of penalty.

Analysis:

Issue 1: Demand of duty for non-return of capital goods within 180 days sent for job work under Rule 4 (5) (a) of the Cenvat Credit Rules, 2004:
The appellant had removed capital goods to job workers under challans issued under Rule 4 (5) (a) of the Cenvat Credit Rules. Duty was demanded equivalent to the Cenvat Credit for non-return of capital goods within 180 days. The appellant paid the duty within 180 days from the date of issue of challan. The Tribunal found that as per Rule 4 (5) (a), the Cenvat Credit is required to be reversed only after 180 days. Since the duty was paid within the stipulated period, no demand, interest, or penalty should be imposed. The Tribunal observed that the original authority did not verify the challans produced by the appellant, so the matter was remanded for fresh verification to determine if the 180-day period had expired.

Issue 2: Denial of Cenvat Credit related to written off value of inputs in the books of accounts and imposition of penalty:
Regarding the written off value of inputs in the books of accounts, the appellant had paid the duty and interest immediately upon being pointed out by the department. The Tribunal noted that there was no suppression of facts or malafide intention, as the written off value was recorded in the books of accounts. Therefore, the Tribunal held that no penalty should be imposed for the written off quantity of inputs. The appeal was disposed of with the penalty set aside in this regard.

In conclusion, the Tribunal ruled in favor of the appellant on both issues. The demand of duty for non-return of capital goods within 180 days was found to be in compliance with the rules, and the penalty related to the written off value of inputs was set aside due to the absence of any malafide intention or suppression of facts.