2013 (11) TMI 236 - AT - Central Excise

Reversal of CENVAT Credit input cleared as such / sale of inputs in auction - reversal on Transaction Value or original credit to be reversed Waiver of Pre-deposit Held that - There is no discussion about this statement at all - there was no admission on the part of the officers of the company that there was no linkage between the inputs written off and sold in auction - department has also not gathered any other evidence to show that the inputs disposed off were different from the one which were written off - the procedure adopted by the appellant is also in accordance with law since during the relevant time if the inputs are cleared as such, the duty payable was on transaction value - the appellant has made out a prima facie case on merits - there will be waiver of pre-deposit and stay against recovery during the pendency of appeal stay granted.

Issues:
1. Disposal of inputs in auction and duty payment under Rule 57AB(1C) of Central Excise Rules, 1944.
2. Reversal of CENVAT credit on inputs and correctness of payment based on transaction value.
3. Confirmation of duty demand, interest, and penalty imposition.

Analysis:

Issue 1: Disposal of inputs in auction and duty payment under Rule 57AB(1C) of Central Excise Rules, 1944
The appellants sold inputs in auction that could not be utilized, with a significant difference between the sale value and the book value. The inputs were cleared on payment of duty under Rule 57AB(1C) of Central Excise Rules. The dispute arose regarding the linkage between the inputs written off and those sold in the auction. The lower authorities questioned the lack of evidence establishing the identity of the inputs. However, the appellant provided a statement with detailed information on the items sold, including part numbers and prices, which was not adequately considered. The tribunal found that the appellant's actions were in accordance with the law during the relevant period, where duty payable was based on transaction value. As a result, the tribunal concluded that the appellant had made a prima facie case on merits, leading to a waiver of pre-deposit and a stay against recovery during the appeal process.

Issue 2: Reversal of CENVAT credit on inputs and correctness of payment based on transaction value
The proceedings initiated against the appellants included a demand for the reversal of the entire amount of CENVAT credit availed on the inputs disposed of in the auction. The authorities argued that the payment based on transaction value was incorrect and that the duty demand should cover the entire value of the input credit written off. However, the tribunal found that there was no concrete evidence or admission indicating a discrepancy between the inputs written off and those sold in the auction. The tribunal highlighted the lack of evidence gathered by the department to support their claim. Moreover, the tribunal emphasized that the appellant's procedure was lawful under the relevant regulations, further supporting the appellant's position.

Issue 3: Confirmation of duty demand, interest, and penalty imposition
The proceedings concluded with the confirmation of a duty demand amounting to Rs.15.75 lakhs, linked to the entire value of input credit written off. Additionally, a penalty of Rs.1 lakh was imposed along with interest. However, the tribunal, after a thorough review of the case and considering the arguments presented, found in favor of the appellant on the merits. Consequently, the tribunal waived the pre-deposit requirement and granted a stay against the recovery process during the appeal period, indicating a favorable outcome for the appellant in this legal dispute.

This comprehensive analysis of the judgment highlights the key issues addressed, the arguments presented by both parties, and the tribunal's findings and decisions, providing a detailed understanding of the legal complexities involved in the case.

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