Appeal Allowed: Tribunal Rules No Cenvat Credit Reversal Under Rule 3(5B) for Pre-March 2013 Manufacturing Goods

The Tribunal set aside the impugned order and allowed the appeal. It concluded that the appellant was not required to reverse the cenvat credit under Rule 3(5B) of the Cenvat Credit Rules, 2004, as the goods were used in manufacturing final products and not written off. The Tribunal noted the absence of recovery provisions for the disputed period before March 2013 and referenced the decision in GKN Driveline India Ltd. to support its decision.

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Issues involved:
Appeal against demand of reversal of cenvat credit on amounts written off by the vendor.

Summary:
The appellant, a company, had purchased goods from its principal and the principal wrote off the amount. The Revenue invoked Rule 3(5B) of Cenvat Credit Rules, 2004 for demanding reversal of cenvat credit. The appellant argued that the goods were used in manufacturing final products, thus not subject to Rule 3(5B). They highlighted the absence of recovery provision for the disputed period before March 2012. Additionally, they relied on Circular No. 990/14/2014-CX(NT) and previous tribunal decisions supporting their stance. The Authorized Representative supported the impugned order.

The Tribunal analyzed Rule 3(5B) and noted that credit reversal is required only when goods on which credit was taken are written off fully or partially. The appellant contended that the goods were used in manufacturing, not written off. The Tribunal found no evidence that the goods were not used in production. The proviso to the rule also supported allowing credit when goods are used in manufacturing final products.

Referring to the decision in GKN Driveline India Ltd., the Tribunal noted that recovery provisions for Rule 3(5B) were introduced only from March 2013, not applicable to the disputed period. Consequently, the impugned order was set aside, and the appeal was allowed.

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