2016 (10) TMI 381 - AT - Central Excise

Availability of sufficient credit in the statutory record - levy of interest - Held that - the procedure of filling application as per 2010 Budget proposal was not complied with. It is needless to state that the approach of the appellant of reversing the proportionate credit being the object of the 2010 Budget provision, asking the appellant to go through the application procedure is redundant. Therefore, the authority is only to satisfy themselves whether proportionate credit has been reversed or not without burdening the appellant to go through the technical procedures of the law. What that is required is that authority is to look into the substance of the transaction without appreciation of the format. If there is sufficient credit available on statutory record, the appellant shall not suffer penalty. It is needless to state that when sufficient credit is available on record, upon verification, there shall no demand of any duty liability - matter on remand to the adjudicating authority for finding out the credit availability on the statutory record - appeal disposed off.

Summary

Issues Involved:
Levy of interest based on sufficient credits in the statutory record.

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI revolves around the issue of levy of interest based on the availability of sufficient credits in the statutory record. The appellant argued that despite repeated directions of remand, the authorities failed to acknowledge the appropriate reversal of input credit due to the use of common inputs in the manufacturing process of dutiable and non-dutiable goods. The appellant emphasized that they had already reversed the proportionate credit before the 2010 budget proposal, thereby negating the need for a fresh application before the Commissioner. The appellant maintained that there were adequate credits at the material time and denied any abuse of such credit. On the other hand, Revenue supported the adjudication process.

Despite several remands, the Revenue could not satisfy the Bench regarding the availability of sufficient credits in the statutory record for the decision on the levy of interest. As a result, the Tribunal directed the adjudicating authority to provide a fair opportunity for examination to the appellant within 15 days to settle the matter concerning the levy of interest. The Tribunal noted that the appellant's approach of reversing proportionate credit aligned with the 2010 Budget provision, making the application procedure redundant. The focus should be on verifying whether the proportionate credit has been reversed, without burdening the appellant with technical application procedures.

The Tribunal clarified that if there is ample credit in the statutory record during the relevant period, no interest levy should occur. Consequently, if sufficient credit is available on record, there should be no penalty imposed on the appellant. The judgment emphasized that when there is enough credit on record, no duty liability should be demanded upon verification. Therefore, both appeals were remanded to the adjudicating authority for a limited exercise focusing on the availability of sufficient credits in the statutory record.

In conclusion, the judgment highlights the importance of verifying the presence of adequate credits in the statutory record to determine the levy of interest and avoid imposing penalties or demanding duty liability when sufficient credits are available. The Tribunal's decision underscores the need for a fair examination process without unnecessary technical procedures, focusing on the substance of the transaction rather than the format.