Tribunal upholds Cenvat Credit demand for spare parts sale, emphasizing reversal rule on written-off quantity

The Tribunal upheld the demand for Cenvat Credit based on quantities cleared for spare parts sale, finding a suppression of facts regarding the transfer of inputs. The appellant's argument that the demand was time-barred and not based on suppression of facts was rejected. The Tribunal emphasized that even before the relevant rule, credit on written off quantity needed reversal if not used in final product manufacture. The appeal was dismissed, affirming the Order-in-Original on 26/04/2017.

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Issues:
Demand of Cenvat credit based on input written off in books of accounts, applicability of Rule 3 of Cenvat Credit Rules, time-barred demand, suppression of facts, admissibility of credit on spare parts sale.

Analysis:
The case involved a demand for Cenvat Credit on inputs believed to have been written off in the books of accounts. The appellant debited duty on the quantity of input transferred to their spare parts division, which led to a show cause notice for demanding the same amount of Cenvat credit. The adjudicating authority confirmed the demand, along with interest and penalty. The appellant challenged the Order-in-Original before the Commissioner(Appeals) but was rejected, leading to the appeal before the Tribunal.

The appellant argued that the demand was not sustainable as the provision for reversal of Cenvat credit on written off quantity came into effect post the period in question. They contended that the demand was time-barred and not based on suppression of facts. The appellant cited various judgments to support their case.

On the other hand, the Revenue reiterated the findings of the impugned order, emphasizing that even for the period before the relevant rule, credit on written off quantity needed to be reversed if not used in the final product manufacture. They argued that the quantity cleared for spare parts sale was not admissible for credit.

After considering the submissions, the Tribunal found that the demand was not based on the quantity written off in the books of accounts. The demand was upheld due to the quantities cleared for spare parts sale, which the appellant themselves quantified and informed to the department. The Tribunal noted a clear suppression of facts regarding the transfer of inputs for spare parts sale, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the impugned order, dismissing the appeal and pronouncing the judgment on 26/04/2017.

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