2019 (7) TMI 1014 - AT - Central Excise

Reversal of CENVAT credit - inputs/capital goods - M.S. Angles, M.S. Plates, Foundation bolts and Channels, etc., which were used in their factory - period January 2012 to January 2014 - credit was reversed but there was short reversal - HELD THAT - As per the stand of the appellant, he has reversed CENVAT credit of ₹ 16,60,408/- in CENVAT account vide Entry 66 and 419 but as per the verification done by the Superintendent of Bijapur, the appellant has reversed only an amount of ₹ 16,55,919/- and balance of ₹ 10,329/- is yet to be paid by the appellant along with interest and penalty. Since there is discrepancy in the reversal of the CENVAT credit, the matter is remanded to the Original Authority for verification of the same. Interest and penalty - HELD THAT - If on verification, it is found that the appellant has reversed less amount, then the appellant would be liable to pay the differential amount along with interest but if it is found that he has reversed more than what was required then he is not liable to pay any interest and the penalty because he has not utilized the CENVAT credit availed and reversed the same before the issuance of show-cause notice. Appeal allowed by way of remand.

Summary

Issues:
- Irregular CENVAT credit availed on specific items
- Rejection of appeal by Commissioner (A)
- Non-appearance of the appellant during the appeal
- Discrepancy in the reversal of CENVAT credit

Analysis:

The appeal before the Appellate Tribunal CESTAT Bangalore concerned the irregular availing of CENVAT credit by the appellant on items not falling within the definition of inputs or capital goods under the CENVAT Credit Rules, 2004. The Department's internal audit revealed the irregularity, leading to a show-cause notice for recovery of the wrongly availed credit, along with interest and penalty. The Assistant Commissioner, through an Order-in-Original, disallowed the credit and ordered recovery, which was upheld by the Commissioner (A) upon appeal rejection by the appellant.

During the Tribunal proceedings, the appellant failed to appear, prompting the Tribunal to proceed based on the grounds of appeal and materials on record. The learned Assistant Commissioner highlighted that the appellant had wrongly availed CENVAT credit on specific items amounting to a substantial sum. After considering the arguments and records, the Tribunal noted a discrepancy in the amount reversed by the appellant in the CENVAT account. The matter was remanded to the Original Authority for verification to determine the correct amount to be paid, considering the discrepancy in the reversal.

The Tribunal's decision was influenced by a precedent set by the Hon'ble High Court of Karnataka in the case of CCE vs. Bill Forge Ltd., where it was established that if CENVAT credit is not utilized and reversed before the issuance of a show-cause notice, the appellant may not be liable to pay interest and penalty. Therefore, the appeal was allowed by way of remand for further verification and clarification on the reversal of the CENVAT credit, emphasizing the importance of accurate compliance with CENVAT regulations to avoid unnecessary financial liabilities.