2015 (10) TMI 1634 - AT - Central Excise

Waiver of pre deposit - inputs written off fully - reversal of cenvat credit - Suppression of facts - Invocation of extended period of limitation - Held that - The quantification of demand is based on the assumption as the department has adopted the highest rate while denying the credit which is contrary to the provisions of Rule 3(5B) of the Cenvat Credit Rules, 2004 - The provisions relating to reversal of credit on the value of inputs written off fully was introduced for the first time in the Cenvat Credit Rules, 2004 by way of insertion of Rule 3(5B) w.e.f. 11.05.2007 vide Notification No. 26/2007-CE (NT) dated 11.05.2007 and hence, the demand invoking the longer period alleging suppression of facts on the part of the applicants is not sustainable. The demand is, therefore, completely barred by limitation. - Stay granted.

Summary

Issues:
Provision for raw materials not intimated to department, suppression of facts, extended period invokable, penalty imposable.

Analysis:
The appellants made a provision for raw materials, including packing materials, but did not inform the department about it, leading to allegations of suppression of facts and initiation of proceedings for penalty imposition due to the extended period being invokable. The key argument presented was the absence of a recovery mechanism under Rule 3 of the Cenvat Credit Rules, 2004 before 01.03.2013 for the Cenvat Credit related to inputs for which provisions to write off fully or partially were made under Rule 3(5B) of the Cenvat Credit Rules, 2004. The appellants relied on various decisions to support their case, highlighting that the quantification of demand was based on assumptions, with the department using the highest rate while denying credit, contrary to Rule 3(5B) provisions. It was emphasized that the provision for reversal of credit on fully written-off inputs was introduced in the Cenvat Credit Rules, 2004 in 2007, making the demand invoking a longer period alleging suppression of facts not sustainable and time-barred.

The presiding member, B. S. V. Murthy, concurred with the appellants' submissions, agreeing that the appeal could proceed without requiring any pre-deposit. Consequently, the necessity for a pre-deposit was waived, and a stay against recovery was granted for the duration of the appeal, ensuring that the appellants were not unduly burdened during the legal process. The order was pronounced and dictated in an open court setting, providing clarity and transparency in the decision-making process.