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2017 (3) TMI 1216 - AT - Central ExciseCENVAT credit - inputs cleared as such - clearance of the input to sister unit as such after reversing the credit equal to the duty of excise which is applicable on said goods on the date of such removal and on the value determined for such goods - CBEC Circular No. 643/34/2002-CX dated 1-7-2002 - Held that - in terms of the said clarification, it is clear that for arriving at value of the said goods, value shown in the invoice on the basis of which Cenvat credit was taken by the assessee in the first place should be adopted for the purpose of Rule 57 AB (1C) or Rule 3(4) of the CCR, 2001 or 2002 - reliance was placed in the case of Eicher Tractors Vs. CCE 2005 (9) TMI 340 - CESTAT, NEW DELHI , where it was held that The revenue cannot argue against its own Circular, when the Board has stated that the provisions of the Rule 3(5) of the CCR, 2004 would apply in respect of the capital goods and inputs on which credit has been availed are removed as such - demand set aside - appeal allowed - decided in favor of appellant.
Issues:
Confirmation of demand of Cenvat Credit of input cleared as such, applicability of CBEC Circular dated 1-7-2002, valuation of goods for Cenvat credit, Revenue neutrality, limitation period for demand. Analysis: The appeal was filed against the confirmation of demand of Cenvat Credit of input cleared as such. The appellant argued that they were clearing input to their sister concern by reversing the credit during a specific period. They relied on the CBEC Circular dated 1-7-2002 and tribunal decisions in similar cases. The appellant also contended that the demand was beyond the normal period of limitation for some part of it. The respondent supported the impugned order and argued that valuation had to be done as per Rule 8 of the Central Excise Valuation Rules, 2000. The issue of Revenue neutrality was also raised by the respondent. The Tribunal examined the rival submissions and referred to CBEC Circular No. 643/34/2002-CX dated 1-7-2002, which clarified the valuation of goods for Cenvat credit purposes. The Circular emphasized that the value shown in the invoice on the basis of which Cenvat credit was taken should be adopted for valuation. The Tribunal cited previous decisions in support of this valuation method. Additionally, the Tribunal noted a subsequent circular dated 25-4-2005, which superseded the earlier circular and emphasized the application of Rule 3(5) of the Cenvat Credit Rules, 2004 for the removal of inputs or capital goods. Rule 3(5) mandated the payment of an amount equal to the credit availed for such goods upon their removal. Based on the clarification provided in the Circular and the provisions of Rule 3(5) of the Cenvat Credit Rules, 2004, the Tribunal ruled in favor of the appellants. The Tribunal held that the demand could not be sustained in light of the settled legal position. As no other issues were present, the appeal was allowed, and the demand was consequently rejected. The judgment was pronounced in court on 27/2/17.
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