2016 (12) TMI 1513 - AT - Central Excise

Cement and clinker - Reversal of CENVAT credit - Rule 3(5B) of Cenvat Credit Rules - Held that - the parties below have not examined the documentary evidence. The appellant has also produced these documents in the present appeal also. But in the impugned order, the learned Commissioner (Appeals) has observed that the appellants have not produced any documentary evidence to prove that the provision is made only for partial value of goods for write off. In view of this finding returned by the Commissioner, I am of the opinion that this case needs to be remanded back to the learned Commissioner with a direction to consider the documents and the worksheets and the policy of the company with regard to partial write off - appeal allowed by way of remand.

Summary

Issues:
Appeal against Commissioner (Appeals) order rejecting appellant's appeal regarding cenvat credit on value of inputs written off partially.

Analysis:
The appellant, engaged in Cement and Cement Clinker manufacturing, availed cenvat credit under Cenvat Credit Rules 2004. The Accountant General's Audit Party noted a provision for obsolescence of stock in the Books of Accounts for 2007 & 2008, with a provision of ?78,09,412. A show-cause notice was issued for demanding cenvat credit of ?12,49,506 attributable to the value of inputs written off partially in 2007-08. The Additional Commissioner rejected the appellant's submissions, leading to an appeal before the Commissioner (Appeals), who upheld the demand. The appellant contended that Rule 3(5B) of Cenvat Credit Rules was not applicable, citing the introduction of provisions for reversal of credit on written-off inputs. The appellant argued that the provisions for partial write-off were introduced post the dispute period, and the provisions were made only in financial books while the goods remained in inventory for use. The appellant relied on Circular No. 645/36/2002-CX, CCE, Jamshedpur Vs. Tata Motors Ltd., and Sanghavi Engineering Vs. CCE, Hyderabad to support their case.

The appellant further argued that the inputs were used in manufacturing, entitling them to take back the credit under Rule 3(5B). Despite submitting evidence of partial provisions in reply to the show-cause notice and during the appeal, the lower authorities did not consider the documentary evidence. The Commissioner (Appeals) observed a lack of evidence for partial write-off provisions, prompting the Tribunal to remand the matter back to the Commissioner for a fresh decision. The Tribunal directed the Commissioner to consider the documentary evidence, policy of the company, and worksheets regarding partial write-off before disposing of the case, allowing the appeal by way of remand.