2015 (2) TMI 380 - AT - Central Excise

Tribunal Upholds Decision on CENVAT Credit Appeal, Emphasizes Need to Reverse Credit

The Tribunal upheld the Commissioner(Appeals)'s decision in the Appeal against an Order-in-Original regarding CENVAT Credit availed on inputs removed from ... Availment of CENVAT Credit - Removal of goods as such without reversal of CENVAT Credit - alleging violation of various provisions of CENVAT Credit Rules, 2004 - Held that:- Undisputedly the Applicant had cleared inputs as such from their Unit No.1 to Unit No.2 without following the procedure laid down under Rule 3(5) of CENVAT Credit Rules, 2004. Also, I find that while rejecting their Appeal Ld. Commissioner(Appeals) has discussed the issue in detail and recorded a categorical finding relating to the applicability of revenue neutrality to the present situation also made a categorical observation that the Appellant failed to establish that the inputs received at their Unit-2 and had been utilized in or in relation to the manufacture of the final product. - Reason to interfere with the aforesaid finding of the Ld. Commissioner(Appeals). Further, I am of the opinion that the decision cited by the learned representative for the Appellant is not applicable to the facts of the present case, inasmuch as in that case the inputs which were cleared as inter-mediate product, received back in the factory and utilized in the manufacture of final product. - Decided against assessee. Issues:Appeal against Order-in-Original regarding CENVAT Credit availed on inputs removed from one unit to another without reversal of credit.Analysis:1. The case involved an Appeal against an Order-in-Original dated 31.12.2008 regarding the availing of CENVAT Credit on inputs at one unit and removing them to another unit without reversing the credit.2. The Appellant had two units engaged in manufacturing industrial filters. They availed CENVAT Credit on inputs at Unit-1 but removed them to Unit-2 without reversing the credit, leading to a demand notice alleging violation of CENVAT Credit Rules, 2004.3. The Appellant argued that since both units belonged to the same management, the situation was revenue neutral, citing a Tribunal decision. However, the Revenue contended that Rule 3(5) of CENVAT Credit Rules required reversal of credit when inputs were removed, supported by the Commissioner(Appeals)'s finding.4. The Revenue emphasized the need to reverse credit under Rule 3(5) and the requirement for removal under Central Excise Rules. The Commissioner(Appeals) found the concept of revenue neutrality inapplicable and doubted the utilization of inputs in Unit-2.5. The Tribunal noted the unauthorized removal of inputs without following Rule 3(5) and agreed with the Commissioner(Appeals)'s detailed findings. The Tribunal dismissed the Appeal, stating that the cited case was not applicable as it involved a different scenario of utilizing inputs in the final product.6. The Tribunal upheld the Commissioner(Appeals)'s decision, emphasizing the duty to pay back the credit on removed inputs and the lack of evidence on the utilization of inputs in manufacturing dutiable goods at Unit-2. The Appeal was rejected based on the findings and legal provisions cited.