9911796707
TMI Blog2025 (3) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of M/S. STEEL AUTHORITY OF INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, DURGAPUR NOW COMMISSIONER, CGST & CX, BOLPUR COMMISSIONERATE [2024 (12) TMI 1538 - CESTAT KOLKATA], wherein it has been held that the provisions of Rule 3(5B) of the CENVAT Rules are not applicable in such cases. Extended period of limitation - HELD THAT:- The appellant is a wholly owned Govt. of India undertaking whose complete set of records were maintained and whose accounts were audited by statutory auditors appointed by CAG as well as supplementary audit by representatives of CAG-New Delhi. The appellant did not suppress any information from the Department and in fact maintained all the statutory documents, records/registers and accounts and filed the statutory returns. Thus, it is observed that the conditions precedent for invoking longer period of limitation under proviso to Section 11A(4) of the Central Excise Act are not satisfied in the present case and hence the demand confirmed by invoking the extended period of limitation is not sustainable. Conclusion - i) Rule 3(5B) of the CENVAT Credit Rules, 2004, does not apply to provisions for slow-moving inventory that are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inventory in the Books of Accounts. Since it is not concerned with obsolete items, which are unusable, the appellant contends that the provision of Rule 3(5B) of the CENVAT Credit Rules was not applicable. The appellant states that the issue is no more res integra and cites the following reported decisions in support:- (a) M/s. Steel Authority of India Ltd.vs Commissioner of Central Excise, Durgapur [2025-TIOL-231-CESTAT-KOL]; (b) General Motors Pvt.Ltd.vs Commissioner of CGST and CE, Pune-I [(2023)12 Centax 79 (Tri.Bom.)]; (c) Commissioner of Central Excise vs. Ingersoll Rand (India) Ltd. [2012-TIOL-1107-HC-AHM-CX] 3.1. The appellant submits that as per the accounting standard developed by the Institute of the Chartered Accountants in India, they followed the accounting principle of making provision in respect of the value of the Raw Materials & Components, Stores, Spares and Loose tools, drawing instruments, etc., that have remained un-moved consecutively for three years. They have also written-back the value from among those provided-for in each year, when some of those could be used in the manufacture. It is submitted by them that in the balance sheet of each year, to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found the figures from the respective audited financial accounts. They submit that it must be appreciated that the appellant, based on their bona fide understanding of the law, did not consider any reversal of credit; since the issue is a predominant legal issue no mala fide can be attributed on the part of the appellant so as to attract the longer period of limitation as well as the penal provisions. The appellant claims that they did not suppress any information from the Department and maintained all the statutory documents, records/registers and accounts and filed the statutory returns and thus the conditions precedent for invoking longer period of limitation under proviso to Section 11A(4) of the Act are not satisfied in the present case; hence they contend that the demand confirmed by invoking the extended period of limitation is not sustainable. In support of their contention, the appellant relied on the following decisions: (a) Tamil Nadu Housing Board vs. UOI [1994 (74) ELT 9 (S.C.)] (b) Uniworth Textiles Ltd. vs. CCE [2013 (288) ELT 161 (S.C.)] 4. The Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order. 5. Heard both sides and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Billets, Slabs, angles, TMT Bar, Channels etc. They were also availing the facility of Cenvat Credit on inputs, capital goods and input services as provided under Cenvat Credit Rules, 2004 (hereinafter referred as CCR 2004).While auditing the records of the appellant, it was pointed out by the auditors that the appellant has made the provision ofRs.20,07,37,034/- against the stock value of Rs.28,14,81,491/- in the Financial Year 2016 & 17, for non-moving/obsolete/surplus inventories on which the Cenvat Credit was not reversed by the appellant as is required under rule 3 (5B) of CCR 2004. Though the appellant contended that the said rule does not apply but no documentary evidence could be produced by the appellant. Resultantly, vide SCNNo.16827 dated 16.12.2020 Cenvat Credit amounting toRs.3,30,81,463/- was proposed to be reversed along with the interest and the penalty of the same amount. While adjudicating the said proposal, the original adjudicating authority vide Order No.29/2022dated 21.12.2022 has ordered the partial recovery for the sum ofRs.7,86,240/- by dropping the balance demand of Rs.3,22,95,223/-along with the interest. Penalty of same amount of Rs.7,86,240/- has been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be construed that the value of the inputs are written off from the books of account and are not usable resulting into invoking of Rule 3(5B) of Cenvat Credit Rules, 2004. 10. I also observe that the appellant has created a general provision for slow/non-moving inventory and have taken the stand that they have not written off the inventory from the asset account in actuality the provision has bene made by appropriation in the profit and loss account without writing off any input/value from the asset/inventory account. I observe that there is a difference between writing off inputs vis-à-vis provision of slow moving inventory the goods continued to lie in the appellant's factory and gradually used in manufacture of dutiable final products such goods cannot be called as the inventory written off. I draw my support from the decision of Hon'ble Supreme Court in the case of Reliance Energy Ltd. vs. Maharathtra State Road Development Corporation reported as 2007 (8) SCC 1 wherein it has been observed that the concept of provision for doubtful debts is different from the concept of write off. The provision for "doubtful debts" cannot be equated to "write off". Hon'ble Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposable against the appellant. With the aforesaid terms, we set aside the impugned order and the appeal is allowed accordingly." 6.2. By following the ratio of the decision cited above, we hold that the demand of duty, along with interest, confirmed in the impugned order is not sustainable. Since, the demand of duty is not sustained, the question of imposing penalty does not arise. 7. We also observe that the appellant is a wholly owned Govt. of India undertaking whose complete set of records were maintained and whose accounts were audited by statutory auditors appointed by CAG as well as supplementary audit by representatives of CAG-New Delhi. We find that the appellant did not suppress any information from the Department and in fact maintained all the statutory documents, records/registers and accounts and filed the statutory returns. Thus, we observe that the conditions precedent for invoking longer period of limitation under proviso to Section 11A(4) of the Central Excise Act are not satisfied in the present case and hence the demand confirmed by invoking the extended period of limitation is not sustainable. 8. In view of the above findings, we set aside the demands con ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
