2019 (11) TMI 484 - AT - Central Excise

Cenvat CREDIT - closing stock of inputs and inputs contained in the final/finished goods as on 31.03.2005 - reversal of CENVAT Credit sought on the ground that the appellant had moved out of CENVAT scheme and opted for exemption under N/N. 08/2003-C.E. dated 01.03.2003 - HELD THAT - The issue is no more res integra, as submitted by the Ld. Consultant for the appellant, since the very jurisdictional High Court in the case of M/s. Tansi Fabrication Works 2018 (7) TMI 1371 - MADRAS HIGH COURT after considering the decision of the Hon ble Apex Court in M/s. COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. 1999 (8) TMI 920 - SUPREME COURT and also the decision of the Hon ble Punjab and Haryana High Court in the case of Commissioner of C.Ex., Chandigarh Vs. M/s. C.N.C. Commercial Ltd. 2007 (10) TMI 203 - HIGH COURT PUNJAB AND HARYANA has concluded that the petitioner therein having rightly availed the CENVAT Input Credit originally, could not be called upon to reverse the same merely because it was stepping into exemption regime. There was no reversal required, as demanded by the Revenue - The impugned order therefore cannot sustain and is accordingly set aside. Extended period of limitation - HELD THAT - The Revenue has even failed to justify invoking the extended period of limitation since, the Show Cause Notice is issued beyond the normal period; the period is 01.04.2005 whereas the Show Cause Notice came to be issued in January 2008 i.e., after nearly three years and that the appellant had at least a year before filed its reply - Moreover, the alleged suppression is based on statutory documents like P L Account and balance-sheet and no new or external materials/documents were used or even an independent report for that matter, to allege such suppression - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Whether the assessee was required to reverse the CENVAT Credit in its closing stock of inputs and final goods as on 31.03.2005?

Analysis:
The only issue in this appeal was whether the assessee needed to reverse the CENVAT Credit in its closing stock of inputs and final goods as on 31.03.2005. The Show Cause Notice was issued demanding the reversal of CENVAT Credit due to the appellant moving out of the CENVAT scheme and opting for exemption under Notification No. 08/2003-C.E. Both the Original Authority and the First Appellate Authority found that the appellant had partially reversed the credit but not the full amount as required by Rule 11(2) of the CENVAT Credit Rules, 2004. The demand was confirmed, holding the appellant liable to pay an amount equal to the CENVAT Credit on the closing stock as of 31.03.2005. The Revenue alleged suppression based on discrepancies in the Profit and Loss Account.

During the hearing, the appellant's consultant argued that the issue of reversal had been settled by the Supreme Court in the case of Collector of Central Excise, Pune Vs. M/s. Dai Ichi Karkaria Ltd. The consultant highlighted that various judicial fora across the country had followed this decision. The Revenue, represented by the Authorized Representative, supported the findings of the lower authorities.

The Tribunal analyzed the issue and referred to various legal precedents, including decisions from the Apex Court and High Courts. It noted that the issue was no longer res integra, citing judgments from the jurisdictional High Court and other courts that supported the appellant's position. The Tribunal concluded that the appellant was not required to reverse the CENVAT Credit, as demanded by the Revenue, and set aside the impugned order.

Additionally, the Tribunal found that the Revenue failed to justify invoking the extended period of limitation for issuing the Show Cause Notice, as it was beyond the normal period. The alleged suppression was based on statutory documents like the Profit and Loss Account, without new or external materials to support the claim. Therefore, the impugned order could not be sustained on this ground as well.

Ultimately, the Tribunal allowed the appeal with consequential benefits, if any, as per the law. The decision was pronounced in open court on 08.11.2019.