Tribunal rules in favor of assessee on CENVAT Credit reversal issue

The Tribunal held that the assessee was not required to reverse the CENVAT Credit in its closing stock of inputs and final goods as on 31.03.2005. The demand for reversal was based on the appellant's shift from the CENVAT scheme to exemption under Notification No. 08/2003-C.E. The Tribunal referenced legal precedents, including the Supreme Court decision in Collector of Central Excise, Pune Vs. M/s. Dai Ichi Karkaria Ltd., and concluded that the appellant had complied with the rules. The Tribunal also rejected the Revenue's claim of suppression due to lack of new evidence and set aside the demand, allowing the appeal with consequential benefits.

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Issues Involved:
Whether the assessee was required to reverse the CENVAT Credit in its closing stock of inputs and final goods as on 31.03.2005Rs.

Analysis:
The only issue in this appeal was whether the assessee needed to reverse the CENVAT Credit in its closing stock of inputs and final goods as on 31.03.2005. The Show Cause Notice was issued demanding the reversal of CENVAT Credit due to the appellant moving out of the CENVAT scheme and opting for exemption under Notification No. 08/2003-C.E. Both the Original Authority and the First Appellate Authority found that the appellant had partially reversed the credit but not the full amount as required by Rule 11(2) of the CENVAT Credit Rules, 2004. The demand was confirmed, holding the appellant liable to pay an amount equal to the CENVAT Credit on the closing stock as of 31.03.2005. The Revenue alleged suppression based on discrepancies in the Profit and Loss Account.

During the hearing, the appellant's consultant argued that the issue of reversal had been settled by the Supreme Court in the case of Collector of Central Excise, Pune Vs. M/s. Dai Ichi Karkaria Ltd. The consultant highlighted that various judicial fora across the country had followed this decision. The Revenue, represented by the Authorized Representative, supported the findings of the lower authorities.

The Tribunal analyzed the issue and referred to various legal precedents, including decisions from the Apex Court and High Courts. It noted that the issue was no longer res integra, citing judgments from the jurisdictional High Court and other courts that supported the appellant's position. The Tribunal concluded that the appellant was not required to reverse the CENVAT Credit, as demanded by the Revenue, and set aside the impugned order.

Additionally, the Tribunal found that the Revenue failed to justify invoking the extended period of limitation for issuing the Show Cause Notice, as it was beyond the normal period. The alleged suppression was based on statutory documents like the Profit and Loss Account, without new or external materials to support the claim. Therefore, the impugned order could not be sustained on this ground as well.

Ultimately, the Tribunal allowed the appeal with consequential benefits, if any, as per the law. The decision was pronounced in open court on 08.11.2019.

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