2016 (4) TMI 684 - AT - Central Excise

Tribunal remands CENVAT credit reversal for verification, penalties set aside

M/s. Ellenbarrie Industrial Gases Ltd. Versus Commr. of Central Excise, Kolkata

The appeals filed by the appellant were allowed by the Tribunal, remanding the matter back to the adjudicating authority for proper verification of the ... Imposition of penalties - Reversal of Cenvat credit - Rule 6(3A) of the CCR 2004 - CA certificate furnished by appellant - Held that:- the appellant has now furnished C.A. certificates with respect to the CENVAT Credit required to be reversed under the provisions of Rule 6(3A) ibid. In the interest of justice, the order passed by the first appellate authority is set aside and the matter is remanded back to the adjudicating authority for verifying the CENVAT Credit reversed by the appellant under the provisions of Rule 6(3A) ibid. If there is any short payment as accepted by the appellant then the same should be reversed/paid back alongwith interest. However, no malafide can be attributed on the part of the appellant as reversal of CENVAT Credit as per the provisions of Rule 6(3A)ibid is only a calculation exercise for which penalties are not imposable. Accordingly, the penalties imposed are set aside. - Appeal allowed by way of remand Issues:1. Correct reversal of CENVAT credit under Rule 6 (3A) of CENVAT Credit Rules 2004.2. Verification of C.A. certificates by the adjudicating authority.3. Imposition of penalties on the appellant.Analysis:Issue 1: Correct reversal of CENVAT credit under Rule 6 (3A) of CENVAT Credit Rules 2004The appellant filed appeals against the Order-in-Appeal dated 1/3/2011, challenging the correctness of the CENVAT credit reversal demanded under two show cause notices. The consultant for the appellant argued that the appellant had reversed the CENVAT credit as required by Rule 6 (3A) during the relevant period. The appellant submitted Chartered Accountant certificates showing the reversal amounts for the financial years 2008-2009 and 2009-2010. The Tribunal noted that the amounts calculated by the appellant had not been verified by the adjudicating authority. Consequently, the Tribunal remanded the matter back to the adjudicating authority for verification of the CENVAT credit reversal. The Tribunal emphasized that if there was any shortfall in payment, the appellant should reverse or pay it back along with interest.Issue 2: Verification of C.A. certificates by the adjudicating authorityThe Revenue contended that the C.A. certificates produced by the appellant had not been verified by the adjudicating authority and, therefore, could not be accepted as appropriate credit reversal under Rule 6 (3A) of the CENVAT Credit Rules 2004. The Tribunal acknowledged this argument and decided to remand the matter back to the adjudicating authority for proper verification of the CENVAT credit reversal amounts provided by the appellant in the C.A. certificates.Issue 3: Imposition of penalties on the appellantThe penalties imposed on the appellant were a subject of contention. The appellant's consultant argued that since the appellant was willing to pay the differential amount along with interest, no penalties should be imposed, as the CENVAT credit reversal was a matter of calculation. The Tribunal agreed and set aside the penalties imposed by the adjudicating authority, emphasizing that no malafide intent was found on the part of the appellant. The Tribunal clarified that penalties were not applicable for errors in CENVAT credit reversal calculations.In conclusion, the appeals filed by the appellant were allowed by way of remand to the adjudicating authority for proper verification of the CENVAT credit reversal amounts. The Tribunal emphasized that the appellant should be given an opportunity for a personal hearing before the final order is passed in this matter.