2019 (2) TMI 1417 - AT - Central Excise

CENVAT Credit - used capital goods or scrap? - used printing cylinders sold as scrap - liability for the period upto 01/04/2012 and after 27/09/2013 - extended period of limitation - Held that - From 01/04/2012 to 27/09/2013, the law is very clear and even in respect of capital goods cleared as scrap, the appellants are required to reverse the credit as per the said provision. In this regard, Ld. Counsel has argued that in some of the cylinders, they have not availed the Cenvat Credit. The said claim was, however, not made before the lower authorities. It is apparent, that the provisions of Central Credit Rules, 2004 would apply only to the capital goods cleared as scrap on which they have availed Cenvat Credit. In respect of others, the said provision may not apply. The reversal of CENVAT Credit needs to be requantified in such cases. Accordingly, for the period 01/04/2012 to 27/09/2013, the matter is remanded to original Adjudicating Authority to work out to exact liability - In respect of period after 27/09/2013, the law is very clear and capital goods cleared as scrap has to be charged to duty on the basis of the transaction value. The appellant has already discharged the liability and thus the demand cannot sustain for that period. Extended period of limitation - Held that - The law and the material time was very clear and there was no scope for doubt. In these circumstances, the extended period is rightly been invoked. Appeal allowed in part and part matter remanded.

Summary

Issues:
- Reversal of Cenvat Credit for used printing cylinders sold as scrap
- Changes in law regarding Cenvat Credit rules
- Treatment of goods as scrap or used capital goods
- Liability for the period before 01/04/2012 and after 27/09/2013
- Invocation of extended period of limitation
- Requantification of Cenvat Credit reversal

Analysis:

The appeal pertains to the reversal of Cenvat Credit by Parikh Packaging Pvt. Ltd. for used printing cylinders sold as scrap. The appellant argued that the law had changed twice during the relevant period. Initially, the liability was based on the actual goods revoked on which Cenvat credit was taken. Subsequently, amendments were made to the Cenvat credit rules, removing the distinction between capital goods cleared as such or as waste and scrap. The appellant admitted the liability for the period from 01/04/2012 to 26/09/2013.

Regarding the treatment of goods as scrap or used capital goods, the Revenue sought reversal of Cenvat Credit based on the goods being treated as used capital goods due to the invoicing method. The appellant contended that the goods were described as scrap and the invoicing in numbers was due to inventory practices. The appellant disputed the liability for certain cylinders for which no credit was taken.

The Tribunal noted the changes in the law and ruled that from 01/04/2012 to 27/09/2013, the liability for capital goods cleared as scrap had to be reversed as per the amended provisions. The matter was remanded to the Adjudicating Authority to determine the exact liability for this period. For the period after 27/09/2013, the law was clear, and the appellant had already discharged the liability based on transaction value.

Regarding the invocation of the extended period of limitation, the Tribunal found that the law was clear during the relevant time, and there was no scope for doubt, justifying the use of the extended period. The appeal was partly allowed, and the penalty was to be requantified based on the above decisions.