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2018 (3) TMI 919 - AT - Central ExciseCENVAT credit - It appeared to Revenue that in terms of Sub-rule (3) of Rule 11 of CCR 2004, appellants were required to reverse CENVAT credit of ₹ 6,07,186/- which was contained in closing balance of 65.219 MT finished goods - Held that - it is very clear that 365.219 M.T. of finished goods containing such inputs which were procured before 17/12/2012. It is clear that under Sub-rule (2) of Rule 11 of CCR 2004, CENVAT credit contained in inputs which were lying in stock as on 17/12/2012 was reversed - CENVAT credit contained in inputs which have procured from 17/12/2012 and which have gone into manufacture of finished goods lying in the stock as on 31/03/2013 was required to be recovered under Sub-rule (3) of Rule 11 of CCR 2004 - appeal dismissed - decided against appellant.
Issues:
1. Appeal against Order-in-Appeal regarding Cenvat credit reversal and penalty imposition. Analysis: The appeal in question arose from Order-in-Appeal No. 437-CE/APPL-LKO/LKO/2015 issued by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Lucknow. The case involved a manufacturing unit dealing with M. S. Bars & M. S. Flats falling under Chapter 72 of the Central Excise Tariff Act, 1985. The appellants had availed Cenvat credit on inputs, including M. S. Scrap. The issue arose when the appellants crossed the SSI Exemption limit on 17/12/2012, leading to the payment of duty on clearances of finished goods. A Show Cause Notice was issued on 06/03/2014, proposing the reversal of Cenvat credit of ?6,07,186 due to the procurement of inputs post the exemption limit. The Order-in-Original dated 26/03/2015 confirmed this demand and imposed a penalty. The subsequent appeal before the Commissioner (Appeals) resulted in the confirmation of the demand but a reduction in the penalty to ?3,00,000. Dissatisfied with this decision, the appellant approached the Tribunal. Upon hearing both parties, the Tribunal analyzed the facts. It was observed that 365.219 MT of finished goods in stock on 31/03/2013 were manufactured from raw material without Cenvat credit. The Tribunal noted that out of the 185.46 MT of M. S. Scrap procured from 17/12/2012 to 31/03/2013, it was evident that 365.219 MT of finished goods could not have been produced. This discrepancy indicated that the finished goods contained inputs procured before the exemption limit date. As per Sub-rule (3) of Rule 11 of Cenvat Credit Rules, 2004, the Cenvat credit on inputs procured after the limit date and used in the finished goods stock as of 31/03/2013 needed to be reversed. The Tribunal found no fault in the Commissioner (Appeals)'s decision and upheld the demand of ?6,07,186 along with interest. Consequently, the appeal by the appellant was dismissed. In conclusion, the Tribunal's decision affirmed the requirement for the appellant to reverse the Cenvat credit on inputs used in finished goods manufactured post the exemption limit date, as per the provisions of the Cenvat Credit Rules, 2004. The judgment highlighted the importance of compliance with tax regulations and the consequences of exceeding exemption limits in the context of duty payments and credit reversals.
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