TaxTMI 
TaxTMI 
2025 (8) TMI 83
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.... located at Angul. The Appellant owns a captive power plant for generation of electricity, which is used in the manufacture of Aluminium metal, the final product. The Appellant avails CENVAT credit on various capital goods, used both in the smelter plant and the captive power plant, including their stores and spares, components and accessories comprising of nearly 35,000 items, which are maintained as inventory for smooth operation of the plant. 2.1. As per the accounting policy of the company, stores and spares which have not moved/used for more than five years are treated as non-moving spares, the value of which is reduced by 95% without any change in the quantity. In the CENVAT credit scheme, in terms of Rule 3(5B) of the CENVAT Credit Rules, 2004, proportionate credit was required to be reversed when the value of capital goods is written off in the books of accounts of the manufacturer. 2.2. Before completion of the quantification process, show-cause notices were issued by the learned Commissioner seeking recovery of proportionate CENVAT credit with interest under Rule 14 of CENVAT Credit Rules, 2004 and imposition of penalty under Rule 15(1) of CENVAT Credit Rules, 2004.....
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....lowing judicial precedents: • BHEL v. Commissioner 2024 (10) TMI 1249 - CESTAT BANGALORE • HP India Sales Pvt. Ltd. v. Commissioner (2024) 24 Centax 278 (Tri.-Bang) • GKN Driveline India Ltd. v. Commissioner 2023 (9) TMI 1131 - CESTAT Chandigarh • M/S. Ericsson India Pvt. Ltd. Versus CCE, Jaipur [2019 (3) TMI 776 - CESTAT New Delhi] 3.2. In view of the above, it is submitted that until the period 28.02.2013, the demand for recovery of CENVAT Credit is liable to set aside on this ground alone. 4. For the period thereafter, interest in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 is attracted only when CENVAT Credit is wrongly taken and utilized. Reliance in this regard is placed on NALCO v. Commissioner 2023 (6) TMI 368 - CESTAT KOLKATA. However, in the present case, for the period March 2013 to 2013-14, the Appellant had sufficient CENVAT credit balance to discharge the liability, and hence the credit was not utilised. The details of Cenvat credit available as balance in their account are furnished herein-below: Month CENVAT Closing Balance (Rs.) March 20....
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....(NT) dated 01.03.2013 w.e.f. 01.03.2013, the recovery provision has been inserted through an Explanation to Rule 3(5B), which reads as follows: "Explanation. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), and (5B), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken." 8.2. We observe that the said Explanation was introduced only w.e.f. 01.03.2013 and it cannot have retrospective effect. Therefore, we hold that in the absence of recovery provision, demand of interest for the period 2011-12 to February 2013 is not sustainable. 8.3. In respect of the credit reversed after 01.03.2013, we observe that in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944, interest is liable to be paid on reversal only when CENVAT Credit is wrongly taken and utilized. In this regard, we observe that for period March 2013 to 2013-14, the Appellant had sufficient CENVAT credit balance in their Cenvat credit account to discharge the liability. Accordingly, we hold that the demand of interest is not sustainable. 8....
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....or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), and (5B), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken." [Notification No. 3/2013-C.E. (N.T.), dated 1- 3-2013] Therefore, recovery of the said cenvat credit by the learned Commissioner is erroneous. This principle has been laid down by the Tribunal in the case of Ericsson India Pvt. Ltd., which later followed in GKN Driveline (India) Ltd. (supra), which reads as:- 12. After considering the submissions of both the parties and perusal of material on record, we find that the appellant as per the normal commercial practice in the automobile industry has made a provision for writing off the cenvat credit on inputs as per Rule 3(5B) of the Cenvat Credit Rules, 2004. During the audit, the department was of the view that the appellant is required to reverse Cenvat Credit availed on inputs which were written off as per Rule 3(5B) of the Cenvat Credit Rules. 13. Further, we find that during the relevant period, there was no recovery mechanism under Rule 3(5B) of the Cenvat Credit Rules and the explanation....