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2018 (1) TMI 955 - AT - Central ExciseReversal of CENVAT Credit availed on SED - inputs removed as such - Held that - the learned Commissioner (Appeals) has dealt with aspect of payment of duty in respect of clearances made during the period from April, 2001 to December, 2001 - However, I find from the proceedings that the issue was not related to payment of duty but the issue was related to reversal of Cenvat Credit on removal of inputs as such I, further, find that Cenvat Credit of SED availed by the appellant on 01.01.2002 was admissible to them during the relevant months from April, 2001 to December, 2001 whenever inputs were brought into the factory. Therefore, debit of SED of ₹ 13,29,776/- after availing the same on 01.01.2002 has satisfied the requirement of Rule 57 AB of Central Excise Rules, 1944 and Rule 3 (4) of Cenvat Credit Rules, 2001 - appeal allowed.
Issues Involved:
1. Admissibility of Cenvat Credit on inputs cleared as such. 2. Reversal of Cenvat Credit on removal of inputs. 3. Interpretation of Rule 3(4) of Cenvat Credit Rules, 2001. Admissibility of Cenvat Credit on inputs cleared as such: The case involved M/s Tuftwan Petrochemicals Ltd. engaged in manufacturing prepared adhesives and organic composite solvents. The appellant availed Modvat/Cenvat credit of duty paid on inputs used in manufacturing their final products. The dispute arose when the department demanded payment of Special Excise Duty (SED) on inputs cleared as such during April 2001 to December 2001. The appellant argued that they only availed credit of Basic Excise Duty (BED) and reversed the entire credit on inputs cleared as such. Subsequently, they availed SED credit on 01.01.2002 and debited the same amount. The Tribunal found that the SED credit availed in January 2002 was admissible for the relevant months in 2001, satisfying the requirements of the rules. Thus, the Tribunal set aside the demand of Central Excise Duty and penalty imposed by the Original Authority. Reversal of Cenvat Credit on removal of inputs: The Original Authority confirmed a demand under Section 11A of the Central Excise Act, 1944, for failure to reverse the credit on inputs cleared as such. The appellant contended that they had appropriately cleared the inputs before the show cause notice was issued. The Tribunal noted that the issue was related to the reversal of Cenvat Credit on removal of inputs, not the payment of duty. It was observed that the appellant had reversed the entire credit availed on inputs cleared as such and had also debited the SED credit on 01.01.2002. Therefore, the Tribunal set aside the confirmation of the demand and penalty, as the appellant had satisfied the requirements of Rule 57 AB of Central Excise Rules, 1944. Interpretation of Rule 3(4) of Cenvat Credit Rules, 2001: The Tribunal analyzed Rule 3(4) of the Cenvat Credit Rules, 2001, which requires payment of duty applicable on the date of removal of inputs. The appellant had availed SED credit on 01.01.2002 for inputs cleared in the previous months of 2001. The Tribunal concluded that the debit of SED amount on 01.01.2002 fulfilled the rule's requirements. Consequently, the Tribunal modified the Order-in-Original to set aside the demand of Central Excise Duty and the penalty imposed, while upholding the reversal of Cenvat Credit availed on SED on 01.01.2002. This detailed analysis of the judgment provides insights into the issues of admissibility of Cenvat Credit, reversal of credit on removal of inputs, and the interpretation of Rule 3(4) of the Cenvat Credit Rules, 2001, as addressed by the Appellate Tribunal CESTAT ALLAHABAD.
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