2023 (12) TMI 1061 - AT - Central Excise

Reversal of CENVAT Credit - Appellants have availed Cenvat Credit both for dutiable and exempted goods - separate Cenvat Credit records and status were not maintained - with effect from 01/03/2011, the supplies to Railways brought under the concessional rate of 1%/2% Excise Duty subject to the condition that no Cenvat Credit is availed - Extended period of Limitation - HELD THAT - The Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR 1995 (12) TMI 72 - SUPREME COURT has held that if the Cenvat Credit taken is reversed, the same would amount to non-availment of Cenvat Credit. As per the factual details available and seen from the records, it is found that the Department itself does not dispute after proper verification by the Superintendent that the Appellant has maintained separate accounts and has not availed the Cenvat Credit to the extent of Rs. 2,69,26,825/- and they have availed Cenvat of Rs. 54,46,566/- only in respect of three or four common inputs - there are no justification for confirmed demand of Rs. 35,39,80,370/- for the period 2009-10 to 28/02/2011. For the same reason, the confirmed demand of Rs. 49,43,41,259/- for the period 01/03/2011 to May 2013 is not legally sustainable. However, verification is required to be done about the Cenvat Credit taken for the common inputs to the extent of Rs. 54,46,566/-, a figure which is being agreed to by the both sides - it is directed that the Adjudicating Authority to apply the procedure prescribed under Rule 6 of CCR, 2004, for proportionate reversal of Cenvat Credit. For arriving at this figure, Gross Total Credit available, total credit taken, credit taken for common inputs, total turnover, exempted turnover etc. are required to be considered as per the CCR Rules, 2004. Extended period of limitation - Appellant submits that there is total absence of suppression on their part and prays that the confirmed demand towards the extended period is required to be set aside - HELD THAT - There are considerable force in this argument since the Appellants have been filing the Returns regularly and non-availment of Cenvat of over Rs. 2.69 Crores as claimed was found to be correct by the Superintendent on 18.06.2018, after the Show Cause Notice was issued. Therefore, it is held that the any confirmed demand for the extended period is not sustainable and such demand on account of time bar is set aside. Matter remanded to the Adjudicating Authority for the limited purpose of quantifying the Cenvat Credit to be reversed on account of common inputs for the normal period only after excluding the demand for the extended period - appeal allowed by way of remand.

Summary

Issues involved: Alleged availing of Cenvat Credit for both dutiable and exempted goods, demand quantification based on exempted goods, failure to maintain separate Cenvat Credit records, procedural lapses, justification of confirmed demands, applicability of concessional Excise Duty rate, reversal of Cenvat Credit, legal sustainability of demands, verification of Cenvat Credit taken for common inputs, absence of suppression, time bar for extended period demands.

The judgment addresses the appeal of a manufacturer of Railway Wagons against a Show Cause Notice alleging availing Cenvat Credit for both dutiable and exempted goods. The Appellant claimed to have foregone Cenvat Credit in respect of exempted finished goods but admitted availing Cenvat Credit for common inputs due to difficulty in separate account maintenance. The Department demanded Excise Duty for the period 2009-2010 to 28/02/2011 and from 01/03/2011 to May 2013. The Appellant argued that they had maintained separate accounts for Cenvat Credit and disputed the confirmed demands amounting to over Rs. 84.83 crores. The Tribunal considered case laws and found that the Appellant had not availed Cenvat Credit to the extent of Rs. 2,69,26,825/- and had taken Cenvat Credit of Rs. 54,46,566/- only for common inputs. Consequently, the Tribunal set aside the confirmed demands for both periods as not legally sustainable.

The Tribunal emphasized the importance of following Rule 6 of CCR, 2004 for proportionate reversal of Cenvat Credit on common inputs. It directed the Adjudicating Authority to verify the Cenvat Credit taken for common inputs and apply the prescribed procedure for reversal. The Tribunal acknowledged the Appellant's claim of foregone Cenvat Credit and stated that any required reversal should be done with interest. Penalties were set aside, and the Tribunal noted the absence of suppression by the Appellant, leading to the setting aside of the confirmed demands for the extended period due to time bar. The matter was remanded to the Adjudicating Authority for quantifying the Cenvat Credit to be reversed on common inputs for the normal period only, excluding the extended period demands. The Appellant was deemed eligible for consequential relief as per law.