2019 (9) TMI 668 - AT - Central Excise

CENVAT Credit - Partial writing off of inputs - reversal u/r 3(5B) of CCR - HELD THAT - It is an admitted fact that the appellant has partially written off the value of certain inputs and has not fully written off. Further, as per the provisions of Rule 3(5B), the appellant is required to reverse the CENVAT credit if he has written off fully the value of inputs whereas in this case, the appellant has not fully written off - Further, in the case of partial writting off, the provision has been incorporated with effect from 1.4.2011 whereas in the present case, the period involved is prior to this date, therefore, this amendment is not applicable in the appellant s case - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of appeal by Commissioner (A)
2. Interpretation of Rule 3(5B) of CENVAT Credit Rules, 2004
3. Time limitation for show-cause notice

Analysis:

Issue 1: Rejection of appeal by Commissioner (A)
The appeal was filed against the order of the Commissioner (A) rejecting the appellant's appeal as time-barred. The Tribunal had earlier remanded the matter back to the Commissioner (A) for a decision on merits. However, the Commissioner (A) again rejected the appeal. The appellant argued that the impugned order was not sustainable in law as it did not properly appreciate the facts and the law.

Issue 2: Interpretation of Rule 3(5B) of CENVAT Credit Rules, 2004
The main contention revolved around the interpretation of Rule 3(5B) of the CENVAT Credit Rules, 2004. The appellant had partially written off the value of certain inputs but had not fully written off. The appellant argued that the rule requiring reversal of CENVAT credit for partially written-off inputs was inserted with effect from 1.4.2011, and the period in question was prior to this date. The appellant relied on various tribunal decisions to support their argument that the demand for reversal of credit was not valid based on the facts of the case.

Issue 3: Time limitation for show-cause notice
The appellant contended that the show-cause notice was barred by limitation as it was issued beyond the normal period of one year. The appellant argued that there was no evidence of suppression of material facts by the appellant with intent to evade payment of duty. The appellant relied on tribunal decisions to support the argument that the demand was time-barred based on the audit conducted and the absence of evidence of suppression.

In the final analysis, the Tribunal found in favor of the appellant on both the merits and the issue of limitation. The Tribunal held that the appellant had not fully written off the value of inputs, and the rule requiring reversal of credit for partial write-offs was not applicable to the period in question. The Tribunal also noted that various tribunal decisions supported the appellant's position. Therefore, the impugned order was set aside, and the appeal of the appellant was allowed.