2018 (7) TMI 1711 - AT - Central Excise

CENVAT Credit - moulds and dies - credit denied on moulds and dies cleared to job workers without reversal of Cenvat Credit - Held that - The moulds and dies were cleared to the job workers without reversal of Cenvat Credit. If appellant had reversed the Cenvat Credit, the said job worker was entitled to take the Cenvat Credit and the said Cenvat Credit would have been used by the job workers for payment of duty of job worked goods on which the appellant has paid duty. Therefore, whole exercise is Revenue neutral - appellants are not required to reverse the Cenvat Credit on moulds and dies cleared to the job worker - credit allowed. CENVAT Credit - subsequent reduction in price of inputs by the supplier by issuance of debit notes - Held that - It is not the case of Revenue, in debit notes the supplier had reduced the duty component of said reduced price. In terms of Rule 3 of Cenvat Credit Rules, 2004, the assessee is entitled to take Cenvat Credit of duty paid on inputs - credit allowed. CENVAT Credit - old capital goods which were cleared after use on payment of duty - Held that - Admittedly, the capital goods in question has been put to use by the appellant and after use of the capital goods, the said capital goods has been cleared by the appellant on payment of duty on transaction value - the reversal of Cenvat Credit is not required. CENVAT Credit - inputs which has been scraped - Held that - The said inputs are not usable by the appellant, therefore the same has been cleared as scrap on which the appellant had paid duty - the appellant is not required to reverse the Cenvat Credit. Penalties are not warranted and is set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat Credit on various grounds including moulds and dies, excess availed Cenvat Credit due to price reduction, denial on old capital goods, denial on inputs cleared as scrap, denial on inputs found short during physical verification.

Analysis:

(a) Denial of Cenvat Credit on moulds and dies cleared to job workers without reversal of Cenvat Credit:
The appellant appealed against the denial of Cenvat Credit based on discrepancies found during an investigation. The Tribunal referred to a similar case and held that the situation is revenue-neutral as the job worker would be entitled to take the Cenvat Credit. Thus, the appellant was not required to reverse the Cenvat Credit on moulds and dies cleared to the job worker.

(b) Cenvat Credit excess availed by the appellant on subsequent reduction in price of inputs by the supplier by issuance of debit notes:
The Tribunal found that the appellant was entitled to take Cenvat Credit of duty paid on inputs as per the Cenvat Credit Rules. Since the supplier did not reduce the duty component in the debit notes, the appellant was not required to reverse the Cenvat Credit.

(c) Denial of Cenvat Credit on old capital goods which were cleared after use on payment of duty:
According to the Cenvat Credit Rules, the appellant was required to reverse the Cenvat Credit if capital goods were cleared as such. However, since the capital goods were put to use and then cleared on payment of duty, the reversal of Cenvat Credit was not required as per the decision of the Hon’ble High Court of Bombay.

(d) Denial of Cenvat Credit on inputs which has been scraped:
The Revenue claimed that the inputs were not used by the appellant, thus requiring a reversal of Cenvat Credit. However, since the inputs were cleared as scrap after being found unusable, the appellant was not required to reverse the Cenvat Credit.

(e) Denial of Cenvat Credit on inputs found during the physical verification:
The appellant did not contest the denial of Cenvat Credit on inputs found short during physical verification, leading to the confirmation of the demand along with interest.

No penalties were imposed on the appellants considering the circumstances of the case. The appeals were disposed of based on the observations made by the Tribunal.