9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 1131 - AT - Central ExciseReversal of CENVAT Credit - input written off as per Rule 3(5B) of the Cenvat Credit Rules - recovery mechanism - HELD THAT - During the relevant period, there was no recovery mechanism under Rule 3(5B) of the Cenvat Credit Rules and the explanation which was introduced vide Notification No. 3/2013 dated 01.03.2013 was from 01.03.2013 vide which it was provided that if the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), and (5B), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken. This recovery mechanism introduced from 01.03.2013 cannot be made applicable from the retrospective date and it can be only prospective and this issue was considered in various decisions by the Tribunal wherein it was held that when there was no recovery mechanism before 01.03.2013, therefore, no recovery can be affected and accordingly the present proceedings initiated under Rule 14 of Cenvat Credit Rules read with Rule 3(5B) of the Cenvat Credit Rules is liable to be dropped. It is pertinent to note that the identical issue was considered by the Division Bench of the Tribunal in the case of M/S. ERICSSON INDIA PVT. LTD. VERSUS CCE, JAIPUR 2019 (3) TMI 776 - CESTAT NEW DELHI wherein the Tribunal has held for reversal of cenvat credit on partial writing down of value of inputs , the provision was introduced only first time by amendment of Rule 3(5B) of Cenvat Credit Rules, with effect from 01.03.2011. Further, there was no provision prior to 01 March 2013 for recovery of cenvat credit and interest thereon under Rule 3(5B) etc. which was made applicable with effect from 01.3.2013 only, by virtue of Notification No. 3 of 2013-CE(NT) dated 01.03.2013. Though the Revenue has filed appeal against the decision before the Hon ble High Court of Rajasthan, but no stay has been granted by the Hon ble High Court. In terms of proviso to Rule 3(5B) itself if the said goods are used subsequently the appellant was entitled to take credit of the amount equivalent to the cenvat credit paid earlier. Further, the entire demand is based on the entries reflected in the financial books of accounts and the balance sheet of the appellant, and there has not been any suppression and malafide on the part of the appellant, and therefore, the demand pertaining to extended period of limitation is not sustainable and the demand pertaining to normal period of limitation comes to only Rs. 2,17,251/-. Thus, when during the relevant period, there was no recovery mechanism provided in the Cenvat Credit Rules, therefore, the entire demand is liable to set-aside Appeal allowed.
Issues involved:
The appeal challenges the order confirming demand under Rule 3(5B) of the Cenvat Credit Rules, 2004, with penalty, based on the reversal of Cenvat Credit availed on inputs written off by the appellant. Summary of Judgment: Issue 1: Demand under Rule 3(5B) of Cenvat Credit Rules, 2004 The appellant, engaged in manufacturing motor vehicles, availed Cenvat Credit on inputs and capital goods. The dispute arose when the department demanded reversal of Cenvat Credit on inputs written off by the appellant. The Commissioner confirmed a demand of Rs. 58,55,479 under Rule 3(5B) along with penalty. The appellant challenged this demand. Decision: The Tribunal held that during the relevant period, there was no recovery mechanism under Rule 3(5B) of the Cenvat Credit Rules. The introduction of a recovery mechanism from 01.03.2013 cannot be applied retrospectively. Citing various precedents, the Tribunal concluded that the proceedings initiated under Rule 14 of Cenvat Credit Rules read with Rule 3(5B) were not sustainable and dropped the demand. Issue 2: Reversal of Cenvat Credit on slow-moving items The appellant argued that under Rule 3(5B), they were required to reverse credit on slow-moving items but could take credit if these items were subsequently used. The appellant had released provisions for items written off after 11.05.2007. The appellant contended that they only needed to reverse a specific amount already done so. Decision: The Tribunal found that the appellant had followed commercial practices by making provisions for writing off Cenvat Credit on inputs. As there was no recovery mechanism before 01.03.2013, the demand for reversal of Cenvat Credit was not sustainable. The Tribunal allowed the appeal, setting aside the demand. Issue 3: Limitation and interest The appellant argued that the demand prior to March 2009 was time-barred, and the extended period of limitation could not be invoked as regular audits were conducted. The appellant also contended that interest could not be demanded if Cenvat Credit was not utilized. Decision: The Tribunal held that as there was no recovery mechanism before 01.03.2013, the demand was not sustainable. The demand pertaining to the extended period of limitation was set aside, and the appeal was allowed with consequential relief. Conclusion: The Tribunal allowed the appellant's appeal, setting aside the demand under Rule 3(5B) of the Cenvat Credit Rules, 2004, with penalty. The decision was pronounced on 30.08.2023.
|
