2012 (6) TMI 586 - AT - Central Excise

Appellate Tribunal CESTAT ruling: Reversal of Cenvat credit on inter-unit transfer, duty payment. Significant judgments cited.

The Appellate Tribunal CESTAT, Chennai, held that during the relevant period, the appellant was required to reverse the Cenvat credit on inputs and ... Whether appellant is required to reverse the Cenvat credit availed on the inputs and the capital goods, while clearing the same to its sister unit or is required to pay duty on the higher rate, applicable at the time of clearance of the same - Held that:- Issue is no longer res integra. It is held in various decisions that during the relevant period, reversal of Cenvat credit originally taken is required to be followed, at the time of clearance of inputs/capital goods as such. See Eicher Tractors Vs. CCE, Jaipur (2005 (9) TMI 340 (Tri)) Issues:- Whether the appellant is required to reverse the Cenvat credit availed on inputs and capital goods while clearing them to its sister unit or pay duty at a higher rate applicable at the time of clearance.Analysis:The judgment by the Appellate Tribunal CESTAT, Chennai, involved three appeals, two by assesses and one by the Revenue, all disposed of by a common order due to the identical issue at hand. The central issue was whether the appellant must reverse the Cenvat credit on inputs and capital goods when clearing them to a sister unit or pay duty at a higher rate during clearance. The Tribunal referred to three significant Larger Bench judgments to settle the matter, including CCE, Coimbatore Vs. American Auto Service 1996 (81) ELT 71 (Tri. - LB), CCE, Vadodara Vs. Asia Brown Boveri Ltd. 2000 (120) ELT 228 (Tri. LB), and Eicher Tractors Vs. CCE, Jaipur 2005 (189) ELT 131 (Tri.- LB). The Tribunal held that during the relevant period, the reversal of Cenvat credit originally taken was mandated at the time of clearance of inputs/capital goods. By applying the ratio of the aforementioned decisions, the impugned order was set aside, and the appellants' appeals were allowed. Consequently, the Revenue's appeal for imposing a penalty was deemed infructuous and rejected. The judgment was pronounced in open court on 02.05.2012, and all three appeals were disposed of accordingly.