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TMI Blog2019 (7) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... s shortage of raw materials by writing off, Rule 3(5B) of Cenvat Credit Rules, 2004 would apply. The period involved being prior to 01.03.2013, the demand of interest and imposition of penalties with respect to credit alleged to be wrongly availed in regard to shortage of raw materials cannot sustain and requires to be set aside - decided in favor of assessee. Excess credit availed by the assessee - HELD THAT:- Admittedly, the appellants have availed wrong credit by taking credit twice on the same invoices. Though, the appellants contend that it is an inadvertent mistake, they are liable to pay interest on the wrong credit availed by them till the reversal of the credit. Taking note of the fact that the credit availed by them was reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest and imposed penalties. In appeal, the Commissioner (Appeals) upheld the same. Hence these appeals. 2. On behalf of the appellants, the learned counsel Ms. S. Sridevi explained that the shortage at the time of physical stock verification was for the reason that the raw materials got mixed up with various other part numbers and could not be identified easily. These were written off in the books of accounts. As per Rule 3(5B) of Cenvat Credit Rules, 2004 introduced with effect from 2008, the appellant has to reverse the credit attributable to the raw materials which are written off. The appellant has, therefore, reversed the credit accordingly. However, there was no provision for payment of interest or recovery of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw materials. When there is shortage of raw materials, Rule 14 of Cenvat Credit Rules, 2004 would apply as the credit is wrongly availed by them. Therefore, the appellants are liable to pay interest as well as penalties on the wrongly availed credit. The Explanation added in Rule 3(5B) of Cenvat Credit Rules, 2004 is only by way of clarification and it cannot be stated that there was no machinery for recovery of wrong credit attributable to raw materials that are written off. With regard to excess credit availed, the learned Authorised Representative submitted that the error would not have come to light but for the audit conducted by the department. Therefore, the appellants are liable to pay interest and penalties. 4. Hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough introduced in 2008, the provision for partial writing off was introduced only in 2011. Thereafter, Explanation was added to the said provision, wherein, it was provided that the credit attributable to the goods that are written off can be recovered as per Rule 14 of Cenvat Credit Rules, 2004. Thus, it can be seen that the provisions for recovery by applying Rule 14 and making the credit attributable to goods that are written off as wrong credit was introduced only with effect from 01.03.2013. The decisions relied by learned counsel for appellant has considered the said issue as to whether the assessee is liable to pay interest and penalty on the credit that is attributable to the goods that have been written off or partially written of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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