Cenvat credit reversal on removal of inputs as such may use invoice value where no sale transaction exists.
Where inputs on which Cenvat credit was taken are removed as such to a sister concern without sale, the amount payable is not to be fixed by applying Rule 8 in the abstract. If no independent transaction value exists, residuary valuation principles apply and the invoice value on which credit was originally taken may be adopted as the basis for reversal. The circular position and prior Tribunal view support that the payable amount corresponds to the credit availed, making the confirmed demand unsustainable.
Issues: Whether the demand could be sustained when inputs on which Cenvat credit had been taken were removed as such to a sister concern and the value for reversal was to be determined by the invoice value or by recourse to Rule 8 of the valuation rules.
Analysis: The binding circular clarified that where inputs or capital goods, on which credit had been taken, are removed as such to a sister unit or another factory without sale, the value is not to be determined by applying Rule 8 in the abstract; if no transaction value is available from sales to independent buyers, the residuary valuation route is to be applied and it is reasonable to adopt the value shown in the invoice on the basis of which Cenvat credit was originally taken. This view was consistent with the Tribunal's earlier decisions relied upon in the order and the later clarification that the amount payable on removal as such is the credit availed in respect of the goods.
Conclusion: The demand was not sustainable and the issue was decided in favour of the assessee.
Final Conclusion: The appeal succeeded and the confirmed demand was set aside.
Ratio Decidendi: For inputs removed as such after availing Cenvat credit, where no sale transaction exists to furnish transaction value, valuation must follow the governing circular and residuary valuation principles, and the invoice value on which credit was originally taken is a permissible basis for determining the amount payable.
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