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2019 (11) TMI 610 - AT - Central ExciseReversal of CENVAT Credit - writing off the value of inputs - Rule 3(5B) of Cenvat Credit Rules - HELD THAT - Rule 3(5B) of CCR observe that the said Rule has come into existence vide Notification No. 16/2009 dated 07.07.2009 which stands substituted w.e.f. 01.03.2011 by virtue of N/N. 3/11. This perusal makes it clear that the inputs/capital goods as were produced in or before the year 2002 when the production activity of the appellant came to an end there was no provision to writing off the value of such inputs and capital goods or the reversal of cenvat credit could not be taken on such goods prior 01.03.2011. Apparently and admittedly the written off qua stores and spares was made in the year 2012 with the reversal of cenvat credit, thereof, i.e. prior the aforesaid Notification of March, 2013. Hence, it becomes clear that Department vide this show cause notice proposing recovery under Rule 14 of Cenvat Credit Rules has given retrospective effect to the said Notification. Notification is clear enough to be effective w.e.f. 1 March, 2013 only. Any legislation can have prospective effect only unless and until expressly given the retrospective effect. The same is not true for the said Notification - the Department was not entitled to invoke Rule 14 while proposing the recovery of reversed cenvat credit alleging it to be short. In M/S BCH ELECTRIC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, FARIDABAD-I 2016 (6) TMI 469 - CESTAT CHANDIGARH it is also held that there has been no statutory provision for seeking reversal of credit on written off finished goods at the most duty could have been demanded on such goods credit was rather held to not have been reversible in view of Rule 3(5B) of Cenvat Credit Rules, 2004. The order under challenge is definitely not based upon any of the documents - appeal allowed - decided in favor of appellant.
Issues:
1. Reversal of cenvat credit on writing off the value of inputs under Rule 3(5B) of Cenvat Credit Rules. 2. Applicability of Rule 14 of Cenvat Credit Rules, 2004 to the reversed cenvat credit. 3. Barred by limitation - Extended period not allowed for invoking show cause notice. Analysis: Issue 1: Reversal of cenvat credit on writing off inputs The case involved a dispute regarding the reversal of cenvat credit on store and spares written off by an appellant engaged in cement manufacturing. The Department alleged a shortfall in the amount reversed, leading to a show cause notice for recovery. The appellant argued that the reversal was based on appropriate documents, which were no longer available post-reversal. The Tribunal noted that the reversal was made in 2012, but the provision for such reversal came into effect only from 2011. Lack of documentary evidence from both parties led to a finding that the show cause notice, issued in 2017, was beyond the permissible limitation period, barring recovery. Issue 2: Applicability of Rule 14 of Cenvat Credit Rules, 2004 The Department invoked Rule 14 of Cenvat Credit Rules, 2004 for recovery, alleging a retrospective application to the reversed cenvat credit. However, the Tribunal highlighted that Rule 14's applicability to such reversals came into effect only in 2013, post the appellant's reversal in 2012. The Tribunal held that the Department was not entitled to invoke Rule 14 retrospectively, as the relevant notification clearly indicated prospective application from March 2013. Issue 3: Barred by limitation - Extended period not allowed The Tribunal emphasized that the show cause notice, issued under Rule 14, was time-barred due to the absence of any suppression of facts by the appellant. Acknowledgment by the Department of the reversal further supported the finding that the notice, issued in 2017, was beyond the four-year limitation period. The Tribunal relied on precedents to support its decision, setting aside the order under challenge and allowing the appeal. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the order and allowing the appeal based on the lack of documentary evidence, the barred limitation period, and the incorrect application of Rule 14. The judgment highlighted the importance of adherence to statutory provisions and timelines in tax matters.
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