2019 (2) TMI 846 – CESTAT HYDERABAD – TMI – CENVAT credit – write off of inputs/capital goods on which CENVAT credit availed – obsolete stock – Held that:- There cannot be two opinions that the appellant had required to pay the amount equivalent to the CENVAT credit availed as soon as the inputs/capital goods written off by them and they did not. If they had used some or all materials from which they had reverse the CENVAT credit subsequently there could have taken credit of such amount as per the proviso. Therefore, there is no infirmity in the lower authority confirming the demand and the First Appellate Authority upholding the demand along with interest and penalties.
–
However, the appellant now submits that they have documents to show that they have subsequently used the written off material. This requires a detailed examination of the documents and re-calculation of the amount of credit to be reversed and interest as well as the penalties – appeal allowed by way of remand.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
It further provided that if the inputs or capital goods were subsequently used in the manufacture of final products or the provision of taxable services, the manufacturer or the output service provider can take credit of the amount equivalent to the CENVAT credit paid. The appellant had clearly written off many goods on which they have CENVAT credit received as obsolete stock. However, they did not reverse the CENVAT credit taken on them. Therefore, a show cause notice was issued to the appellant on 31.01.2017 demanding CENVAT credit of ₹ 8,19,315/- being the CENVAT credit availed and utilized on the inputs/capital goods valued at ₹ 65,54,521/- written off by showing them obsolete items in their Trial balance for 2015-2016. It was proposed to recover this amount under Rule 14(1) (ii) of CCR, 2004 read with Section 11A of Central Excise Act. It was also proposed to charge interest on duty demanded from them under Section 11AA of Central Excise Act, read with Rule 14(1)(ii) o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
acturer or service provider as the case may be, shall pay an amount equivalent to the Cenvat credit taken in the respect of said inputs or capital goods. Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of taxable services, the manufacturer output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of the rules. Therefore, in view of the discussion supra I am of the considered opinion that the contention of the appellant that the mere reduction in the value of the goods and stock being available in the factory did not merit reversal cannot be accepted and that the said case law in respect to the case of Ingersoll prior to amendment of the Rule 3 (5B) are not to any avail to the appellant in the instant case. The appellants therefore are liable to pay the duty at time of write-down the inputs/capital
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ting off the goods. In the circumstance of their not having proved the usage of the impugned goods further in the manufacture, I hold that the demand confirmed vide para 19(i) of the impugned order is upheld along with the attendant interest confirmed vide para 19(ii) of the impugned order. 14. The appellant has also assailed the notice in view of that there is no wilful suppression was proved and they regularly filing the ERI/ER4 return where the ER 4 shows the details of obsolete stock and write off the goods of their company. The figures mentioned in the ER 4 shows the total amounts of all the units of the HSIL Ltd not in respect of the appellant. The issue of making provisions of obsolete stock of inputs/capital goods in their Trial balance 2015-2016 came to the knowledge of the department only after verification of records. Therefore the finding of the Adjudicating Authority that it was only on the audit of the accounts of the appellant that brought out the discrepancy culminating
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ity for verification. 5. Learned Departmental Representative submits that this was a case of taking credit on inputs/capital goods and reversing the credit taken in terms of Section 3(5B) of the CCR, 2004. The assessee had suppressed the relevant facts to the department and had not disclosed the fact that they had written off the inputs/capital goods. This fact was revealed only when the audit was conducted. Therefore, the demand was correctly confirmed and was also upheld by the First Appellate Authority. It is clear from the Rule 3(5B) that debit has to be made when they write off the goods as obsolete. If the goods on which the credit has been so debited get subsequently used at a later stage, they can take credit. Merely because the appellant has used some of the obsolete items after writing off, they cannot escape from Rule 3(5B). This amounts to undue financial accommodation. He draws the attention of the Bench to the Board Circular No. 645/36/2002-CX dated 16.07.2012 and CBEC Ci
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =