2020 (2) TMI 606 - AT - Central Excise

Proportionate reversal of CENVAT Credit - dispute relates to availment of Cenvat Credit on same set of invoices twice and availment of input credit of duty more than the duty amount shown in the relevant invoices for the period 2014-15 - HELD THAT - The Appellant has also produced a Chartered Accountant s certificate showing the reversals made for the FY 2014-15 on account of following the procedure as per Rule 6(3) of the CCR, 2004. Also a verification report as submitted by the Range office of the Appellant is placed on record which shows that the Appellant has actually reversed Cenvat credit following the said process for FY 2014-15. From the above noted facts, I find that the Appellant cannot be asked to pay more than what it has actually availed. The Appellant cannot be asked to reverse more than the actual Cenvat credit availed by the Appellant and based on the Chartered Accountant s certificate and Range Officer s report, there is no doubt as to the fact that the Appellant has actually followed the process of proportionate reversal under Rule 6(3) of the CCR, 2004. Thus, the demand is set aside on the above ground. Imposition of penalty - HELD THAT - The disputed amount had been paid before the issuance of the show cause notice, and the entire amount was paid along with interest. Therefore, the payment of duty in the instant case should have been treated as payment of central excise duty under Section 11A(2B) of the Act and the show cause notice should not have been issued. Additionally, the Revenue has not been able to prove beyond reasonable doubt the presence of fraud, collusion, willful misstatement or suppression of facts on the part of the appellant. Therefore, imposition of penalty under section 11AC of the Act is unwarranted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against confirmation of demand of irregular Cenvat credit, double Cenvat credit, and excess Cenvat credit taken along with interest and penalty for the period 2013-14 and 2014-15.

Analysis:
The appellant, a biscuit manufacturer, appealed against the Order-in-Appeal confirming a demand of irregular Cenvat credit, double Cenvat credit, and excess Cenvat credit taken, along with interest and penalty for the period 2013-14 and 2014-15. The dispute arose from the appellant's alleged availment of Cenvat credit twice on the same set of invoices and taking input credit of duty exceeding the amount shown in the invoices. The appellant contended that they followed the process of proportionate reversal of Cenvat credit under Rule 6(3)(b) of the CCR, 2004. The appellant argued that they had already reversed the maximum credits for FY 2014-15 and FY 2013-14, and therefore, no further reversal was required. The appellant also emphasized that penalty imposition was unjustified as they had reversed the credit upon receiving the audit memo. The Revenue, represented by the Authorized Representative, supported the first appellate authority's order.

The main issue for consideration was whether the appellant needed to reverse the full amount of Cenvat credit due to alleged ineligibility, despite having already followed the reversal procedure under Rule 6(3)(b) of the CCR, 2004. The appellant provided a Chartered Accountant's certificate and a Range Officer's report showing the reversals made for FY 2014-15. The Tribunal referred to a previous case to establish that Rule 6 of the CCR aims to prevent availing Cenvat credit for exempted goods and services, not to extract additional amounts from the assessee. Applying this principle, the Tribunal concluded that the appellant should not be asked to reverse more than the actual Cenvat credit availed. The Tribunal found that the appellant had indeed followed the proportionate reversal process, as evidenced by the documents submitted. Therefore, the demand was set aside. Regarding penalty imposition, the Tribunal noted that the disputed amount was paid before the show cause notice was issued, and the entire amount was paid with interest. Consequently, the Tribunal held that penalty imposition under section 11AC of the Act was unwarranted due to the lack of evidence of fraud or willful misstatement by the appellant.

In conclusion, the Tribunal allowed the appeal filed by the appellant, emphasizing that the appellant had already complied with the necessary reversals and payments, and there was no justification for imposing penalties.