TaxTMI 
TaxTMI 
2018 (7) TMI 529
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.... thereafter suo motu credit is again availed on rejected inputs in respect of which the invoice is prepared but goods are not dispatched. This anomaly arises because on rejection of inputs, the invoice for dispatch of inputs is prepared and duty becomes payable and is debited by the 5th of the succeeding month whereas suo motu credit is availed within few days of rejection of the input even before the duty in respect of rejected goods gets debited by 5th of succeeding month. Therefore the Appellant are availing CENVAT Credit twice in respect of the same inputs which is not admissible to them. Accordingly a show cause notice dated 3.2.2014 was issued to the Appellant as to why:- (i) An amount Rs. 42,64,135/- (Rupees Forty Two Lacks Sixty Four Thousand One Hundred Thirty Five Only ) wrongly availed and utilized should not be recovered from the Noticee in terms of the provisions of Rule 41 of CENVAT Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944. (ii) A penalty should not be imposed upon the Noticee under Rule 15(2|) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. (iii) Amount of interest at applicable rates should be recove....
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....pellant is liable to be dismissed. He also cited some case laws in favour of revenue on the plea of extended period of limitation. These are CCE vs. Tigrania Metal; 2001(132) ELT 103 (Tri.-Del), CCW vs. Cadila Laboratories; 2000(124) ELT 411 (Tri.-Del), Sunshile Tube (P) Ltd. vs. CCE; 2001 (136) ELT 231 (Tri.-Bang) and Jaishri Engg. Co.(P) Ltd. vs. CCE; 1989(39) ELT 449 (Tri.-Del) in which time and again it has been held by this Tribunal that mere visit of department's audit party to the factory is not enough to infer Revenue's knowledge about wrongful availement and the assessee has the burden to prove revenue's knowledge. Some of the Sections and Rule which are relevant for the decision are extracted as under:- Rules 4, of CENVAT Credit Rules, 2004 Rule 4(1) The Cenvat credit in respect of inputs may be taken immediately on receipt of the inputs in the fact manufacturer or in the premises of the provider of output service or in the premises of the job worker, in are sent directly to the job worker on the direction of the manufacturer or the provider of output service may be: Provided that in respect of final product, namely, articles of jewelers or other articles of precio....
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....al Excise Officer, (2) The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause(a) of that sub-section in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunder;. (3) Where the Central Excise Officer is of the opinion that the amount paid under clause(b) of sub-section(1) falls short of the amount actually payable the, the shall proceed to issue the notice as provided for in clause(a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section(2). (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any willful mis-statement; or (d) suppression of fact; or (e) contravention of any of the provisions of this Act of the rules made thereunder with intent t....
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....he said notification, did not exceed rupees four hundred lakhs]. [Explanation 2- The manner of payment as specified in this proviso shall be available to the assessee for the whole of the financial year] [Provided also that an assessee, who has paid [total duty of Rs. ten lakh of more including the amount of duty paid by utilization of Cenvat credit in the preceding financial year, [ shall thereafter, deposit the duty electronically through internet banking.] [Explanation.- For the purposes of this rule.- (a) the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the central Government by the specified date; (b) If the assessee deposits the duty by cheque, the date of presentation of the cheque in the bank designated by the Central Board of Excise and Customs for this purpose shall be deemed to be the date on which the duty has been paid subject to realization of that cheque.] [(1A) Notwithstanding anything contained in sub-rule (1), the duty on the goods removed from the factory or the warehouse, in the State of Gujrat, during the second fortnight of February, 2002 and the month of March, 2002 shall be paid b....
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....d in the name of their vendor rejecting the inputs, which were actually not cleared from the plant but remained inside the plant and whether the appellant has availed double CENVAT Credit on some goods and also whether the extended period of limitation has been rightly invoked by the department. 7. There is no doubt that the appellant have adopted a completely wrong practice. If the inputs were urgently required for production of two wheelers, the appellant need not prepare Invoice for sending the rejected materials back to the vendors and instead ought to have rectified the same in-house. They were also not required to reverse the credit and re-credit in their accounts. Even if they prepared the invoices, they ought to have cancelled the same and have to inform it to the jurisdictional commissioner. Rule 4 of the CENVAT Credit Rules, 2004 enumerates the conditions for allowing the Cenvat credit. As per Rule 4(1) of Cenvat Credit Rules, 2004, the Cenvat Credit in respect of Inputs may be taken immediately on receipt of the Inputs in the factory of the manufacturer. As per Rule 8(2) of Central Excise Rules, credit of duty is admissible as and when the goods and relevant invoices sh....
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....d there has to be harmonious construction while applying them so that there may not be any contradiction/overlapping and the law is followed in true letter and spirit. Although the CENVAT credit initially taken on inputs was reversed at a later date than the date of second time credit by the Appellant and thus, even though for a brief period only, the Appellant had availed double credit in respect of rejected inputs. I, therefore upheld the finding of the ld. Commissioner (Appeals) that the payment of Central Excise duty liability against removal of such inputs by the Appellant can be adjusted against duty liability which is held to be recoverable for availment of Cenvat credit two times on such inputs prior to discharge of Central Excise duty liability on such inputs. 8. The fact about the availment of credit in respect of the rejected inputs on the basis of Appellant's own invoices issued in the name of their vendors was never brought to the knowledge of the department. I have been informed that the Appellant in their monthly ER-1 returns had only shown the quantity of rejected material and duty debited against the same. They never disclosed the fact about in-house rectification....