TaxTMI 
TaxTMI 
2025 (1) TMI 423
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....h Rule 3(5) of Cenvat Credit Rules, 2004. Appellant is registered as manufacturer of parts and accessories of machine tools and tools for milling machines classified under Central Excise Tariff heading 84669310 and 82077090, respectively. Appellant imported various inputs for manufacturing of said products and availed CENVAT credit of the countervailing duty, education cess, secondary higher education cess and additional duty of customs (SAD) paid at the time of import of the said inputs. During Audit for the period from November 2005 to November 2008, it is observed that Appellant was clearing imported inputs 'as such' and selling the same to various customers and it is also observed that Appellant had not paid the amount equivalent to the CENVAT credit availed in respect of additional duty of customs (SAD) paid on the imported inputs, whenever the same were removed 'as such' from their factory. As a result of investigation, proceedings were initiated and Adjudication authority as per the Order-in-Original dated 14.10.2011 confirmed payment of duty (SAD) amounting to Rs. 64,20,716/- in respect of 'as such' clearances under Rule 3(5) Cenvat Credit Rules, 200....
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.... as such. Therefore, the said invoices should have reflected payment of amount equivalent to the cenvat credit availed that should have included the amount equal to the cenvat credit availed towards SAD, which is not seen to have been paid in the invoices." 4. The Ld. Counsel for the Appellant also draws our attention to the reply to show cause notice dated 27.12.2010. The Ld. Counsel further submits that the entire proceedings were initiated without considering the fact that the goods were removed from the factory even 'as such' only on payment of excise duty on selling price resulting in payment of an amount more than the amount of total credit availed including the SAD, hence no loss whatever to the exchequer. Therefore, none of the proceedings stand the scrutiny of law and proceedings were prima facie unsustainable. The Ld. Counsel also draws our attention to the relevant provision of Rule 3(5) of CENVAT Credit Rules, 2004 where it is specifically stated that:- "(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or....
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.... the Appellant had paid entire excise duty with secondary education CESS on the sale value of the inputs, and it appear from the submission and records that the sale value of inputs cleared as such is more than the procurement value. Having noted the facts that the amount paid was on sale prices, which was on the higher end, the Adjudication authority has not examined whether the amounts so paid are on higher side to suffix the amount credit availed in addition to the duty. Since this aspect was not examined, the entire proceedings are unsustainable. The Ld. Counsel to support the above submission relied on the following decisions; a. CESTAT Final Order No. 20739-20742/2023 in case of M/s. Komet Precision Tools India Pvt. Ltd. b. CESTAT Final Order No. 22080/2017 in case of M/s. Komet Precision Tools India Pvt. Ltd. c. CCE & Cus., Surat-III Vs. Creative Enterprises - 2009 (235) E.L.T. 785 [Guj], Department Appeal was dismissed and maintained by Supreme court in case [2009 [243] ELT A 120] [Supreme Court] d. CCE, Pune-III Vs. Ajinkya Enterprises - 2013 (294) E.L.T. 203 (Bom.) e. Ajinkya Enterprises Vs. CCE, Pune-III 2013 (288) E.L.T. 247 ....
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....an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9 of Cenvat Credit Rules, 2004. It was noticed that though the assessee has paid/ reversed amount equal to the credit taken on Basic duty, Education Cess & Secondary & Higher Education Cess in respect of the inputs cleared as such to their unit No. II, they did not pay/reverse the credit of 4% Additional Duty of Customs in respect of the said Inputs. It was observed that the assessee had also cleared their inputs namely Nickel Metal as such to their customers on payment/reversal of amount equal to the Cenvat credit availed by them including the 4% Additional duty of Customs." "3. In his statement dated 26.05.2009, Sh. Hitesh Vadalia, Managing Director of M/s Monarch Catalyst Pvt. Ltd. stated that he was aware of the fact that certain inputs were cleared as such without payment of 4% Additional duty of Customs from their unit No. I situated at A-94 & F-1/2, Phase-I, MIDC, Dombivli (E) to unit No. II situated at D-26, MIDC, Phase-ii, Dombivli (E), since he believed that the said clearances were not sale of goods but....
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....uty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit." 12. The Ld. Counsel also submitted that in response to the Audit objection, a detailed reply was filed by the Appellant vide letter No. MILCEXRPLY2008-09 dated 28.01.2009, where it is clearly stated that as regards the objection on Special Additional Duty of customs on 'as such' clearance, it is stated that the Appellant have been clearing the same on transaction value, the duty finally paid would be substantially higher and the Cenvat credit debit equivalent would be less than the duty actually discharged. Therefore, there is no revenue implication. The Appellant also enclosed working of 25 consecutive Bills of Entries with analysis of the transactions which indicates that much higher duty has been discharged compared to the credit availed. The credit availed is Rs. 17.32 lakhs and duty debited is Rs. 25 lakhs. Thus, the Appellant has paid excess duty of Rs.7.67 lakhs. Inspite of giving such spec....