TaxTMI 
TaxTMI 
2025 (6) TMI 2135
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....it Rules, 2004 as applicable up to 28.02.2011; (ii) whether demand of Cenvat credit in terms of Rule 3(5B) of Cenvat Credit Rules, 2004 is sustainable in respect of finished goods / final products which were treated as scrap and cleared on payment of duty and; (iii) whether demand of duty is sustainable on Cenvat credit availed on entire value of inputs for which only a part provision has been made in the books of accounts for the period from March 2009 to February, 2012. 3. As regards Appeal No. E/25780/2014 filed by the Revenue, the issue is whether benefit of reduced penalty can be extended to the appellant prior to 08.04.2011. 4. The brief facts are the Appellant is manufacturing excisable goods and availing Cenvat credit on payment of duty. Alleging that the appellant who had availed the provision for write-off of the obsolete / non-moving inputs and provision for scraping of inputs periodically has not paid the excise duty against the Cenvat credit availed against the said goods, Show Cause Notice was issued and Adjudication Authority confirmed the demand of duty along with interest, imposed penalty and also appropriated the amount paid by the Appellan....
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....d 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 [two years] shall be computed from the date of receipt of information under sub-section (2). 6. The Learned Counsel submits that as per the above provision, once the Appellant had paid duty under clause (b) of sub-section (1) of section 11A, the Appellant shall not be served any notice under Clause (2) and as per sub section 3, even if a notice is be issued, it should be in respect of such amount which falls short of the amount actually payable. Thus, present show cause notice is issued in violation of the above said provision and prima facie unsustainable. 7. As regards the actual amount payable by the Appellant, Learned Counsel submitted that as per the letter dated 30.01.2013, the practice followed by the Appellant with regard to scraping of the raw materials, finished goods and provisions being made in the books of accounts was informed. Appellant have also submitted that as and when the finished goods are scrapped, the duty was paid even while being transferred t....
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....nce interest amount of Rs. 5,58,616/- was paid vide Challan No. 369 dated 30.5.2014. Thus, there is no reason or justification to allege short payment of interest. The Learned Counsel further submits that in spite of submission of specific chart showing the above details, there is no finding as regards the reason for demanding excess interest and there are no details available either in the show cause notice or in the impugned order to rebut the submissions made by the Appellant. As per Annexure B to their reply, the entire amount of interest stands paid. 11. The Learned Counsel also draws our attention to the following chart showing the details of the provision made by the Appellant against the full and partial provision made on the inputs and consumables, finished products during the period from March 2009 to September 2013. (Amount in Rs.) Month/ period Particulars Value Value of provision Total Duty Remarks Mar-09 Inputs and Consumables 3357407 2716057 279753 Part provision Mar-10 Inputs and Consumables 5513643 3258315 335606 Part provision Mar-11 Inputs and Consumables 7754554 5444101 560742 Part ....
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....de to write-off fully, the demand of CENVAT credit is not permissible in terms of Rule 3(5B) of Cenvat Credit Rules, 2004. Therefore, the demand of CENVAT on making partial provision or reducing the value of inputs during the period prior to 01.03.2011 is unsustainable. The Appellant relied on the following decisions: (i) Solvay Specialties India Pvt Ltd Vs CCE & ST, Surat II 2018 (12) GSTL 82 (Tri - Ahm) (ii) Sanghavi Engineering Vs CCE, Hyderabad 2013 (297) ELT 277 (Tri - Bang) (iii) Kirloskar Ferrous Industries Ltd Vs CCE, Belgaum 2018 (11) TMI 348 - CESTAT Bangalore (iv) Flowserve India Pvt Ltd Vs CCE, Coimbatore 2022 (381) ELT 106 (Tri - Che) 13. As regards invoking the extended period of limitation and imposition of penalty, the Learned Counsel submits that there is no evidence of suppression of fact or malafide intention on the part of appellant for evasion of duty. The issue is purely on the interpretation of provisions of Cenvat Credit Rules, 2004. The Revenue also erred in demanding CENVAT credit on partial provision made on the inputs and the final product treated as scrap and cleared on payment of duty. 14. The Learned Authorise....
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.... made in the books of account, then the manufacturer shall pay an amount equivalent to the CENVAT credit taken in respect of the sald input or capital goods: Provided that if the said input or capital goods is subsequently used in the manufacture of final products, the manufacturer shall be entitled to take the credit of the amount equivalent to the CENVAT Credit paid earlier subject to the other provisions of these rules." 19. From the above, it is very clear that the value of the goods has no relevance be it "stock value" or "provision value" as the actual credit availed by the appellant has to be reversed. All that the appellant need to do is to link the original credit availed invoices to the goods for which the provision has been made and reverse the entire credit availed by them on the goods on which the provision to write-off fully has been made. The plea of the appellant to rework the entire credit reversal is not tenable. The reworking done by the appellant is an afterthought since originally at the time of the visit of the officers to the unit they have reversed the entire credit of Rs. 81,11,255/-and now they are claiming that the amount ought to have been Rs....
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...., the provisions made in respect of the inputs are periodically reviewed and fresh provisions are made. Even the capital goods were also available in the factory. When Cenvat paid is available to the appellants as cenvat credit leading to revenue neutral situation there cannot be any intention of fraud, collusion or suppression of facts to evade payment of cenvat credit as held by the Hon'ble Supreme Court in the matter of Uniworth Textiles Ltd. Vs. CCE, Raipur - [2013 (288) ELT 161 (SC)]. Further the issue is purely regarding interpretation of the Cenvat Credit Rules, 2004. As held by the Hon'ble Supreme Court in the matter of M/s. Pushpam Pharmaceutical Company Vs. CC-[1995 (78) E.L.T 401 (SC)], extended period of limitation is not invokable for just any omission of the Appellant unless it is deliberate to escape from payment of duty. Further longer period cannot be extended when issue involved is interpretation of the complex provision of law as held in the matter of M/s NRC Ltd., Vs. CCE, Thane-I - [2007 (5) STR 308 (Tri. Mumbai)]. Also, Hon'ble Supreme Court in the matter of M/s Cosmic Di Chemicals Vs. CCE, Mumbai (1995 (6) SCC 117) held that intention to evade duty must be pr....