Custom, Excise & Service Tax Tribunal
Ge India Industrial Pvt Ltd vs The Commissioner Of Central Excise on 1 July, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
Appeal(s) Involved:
E/2551/2012-SM
[Arising out of Order-in-Appeal No. 201/2012-CE dated 27/07/2012 passed by Commissioner of Central Excise (Appeals-I) Bangalore]
For approval and signature:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
GE India Industrial Pvt Ltd.,
Plot No. 42/1 & 45/14,
Electronic City-Phase-II,
Bangalore 560 100
Appellant(s)
The Commissioner of Central Excise,
Bangalore
Respondent(s)
Appearance:
Mr. Rama Subramanian, Adv For the Appellant Mr N. Jagadish, A.R. For the Respondent Date of Hearing: 29/06/2016 Date of Decision: 01/07/20167 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20507/ 2016 Per : S.S GARG The present appeal is directed against the order-in-appeal passed by Commissioner (Appeals) dated 27.07.2012 vide which the Commissioner has rejected the appeal of the appellant and upheld the order of the Additional Commissioner.
2. Briefly the facts of the present case are that the appellant is engaged in the manufacture of circuit breakers, switch gears, fuse links etc. The appellant availed CENVAT Credit on inputs for the year ended 31.03.2008. The appellant has created a provision for the obsolete and slow moving stock. The closing stock of inputs at the year end is compared with the annual consumption. If the closing stock is more than the actual annual consumption, provision is made for the extent of difference between the closing stock and annual consumption at 85% of the value of the material. Hence provision is made only for partial write off of inputs. In the excise returns filed for the relevant period, the appellant had mentioned the details of CENVAT credit availed and CENVAT credit reversed on the inputs removed as such. The appellant had cleared the inputs as such during the relevant period. A sum of Rs 3,62,656/- was reversed. The learned Joint Commissioner of Central Excise held that the reversal should have taken place at the time of write off itself and not when the inputs were removed as such. He held that as the amount of CENVAT credit was not debited at the time of write off, the appellant is liable to pay interest from the date on which the write off took place till the date of actual reversal but he did not quantify the interest.
3. Heard both sides and perused the records. The learned counsel for the appellant submitted that as per Rule 3(5B) of the CENVAT Credit Rules 2004, as it existed during the period under dispute, the liability to reverse the credit on inputs arises only if the inputs are fully written off or where any provision to write off fully has been made in the books of accounts, whereas they have made provision for partial write off only. The learned counsel further submitted that the Notification No. 3/2011(CE-NT) dated 01.03.2011 vide which the provisions of the Rule has been extended even to the goods written off partially is effective only from 01.03.2011 and the instant case pertains to the period prior to 01.03.2011. As such he submitted that there is no need to reverse CENVAT credit and consequently the question of payment of interest does not arise.
4. For better appreciation it is relevant to reproduce Rule 3(5B) of CENVAT Credit Rules 2004 at the relevant point of time:
3(5B) if value of any,
i) input or
ii) capital goods before being put to use, on which cenvat credit has been taken is written off fully or where any provision to write off fully, has been made in the books of accounts, then the manufacturer or a service provider, as the case may be, shall pay an amount equivalent to the cenvat credit taken in respect of the said input or capital goods. He further submitted that for the period 2008-09, the learned Addl Commissioner of Central Excise had issued similar show-cause notices. The learned Additional Commissioner of Central Excise vide order-in-original No. 129/2011 dated 01.12.2011 was pleased to hold that the appellant is not liable to reverse CENVAT credit when the value of inputs has been written off partially. A copy of the order has also been placed on record. The learned counsel also submitted that the learned Commissioner (Appeals) in para 7 of the order-in-appeal has misread para 14 of the order-in-original. In support of his submission, he relied upon the judgments of this Bench in the case of Sanghavi Engineering Vs CCE [2013(297)ELT 277 (Tri-Bang) wherein in para-2 the Tribunal has observed as under:
2.?In view of the cited provisions, it has to be held that, prior to 1-3-2011, a manufacturer of final product who availed Cenvat credit on inputs was not required to reverse any part of that credit on the ground of a part of the value of the inputs being written off the books of account. Only cases of writing off the full value of the inputs on which Cenvat credit had been availed called for reversal of the credit. The present one is not such a case. It is also pertinent to note that the Department has no case that the amendment dated 1-3-2011 has retrospective effect.
5. On the other hand the learned A.R. reiterated the findings of the Commissioner.
6. After considering the submission of both sides and on perusal of the provisions of Rule 3(5B) cited (supra) and the judgment of this Tribunal in Sanghavi Engineering (supra), I am of the considered view that the appellant is not liable to reverse CENVAT credit when the value of inputs has been written off partially and the provision of Rule 3(5B) is applicable where the provision of write off fully is made. It is also pertinent to note that for the subsequent period, the Additional Commissioner vide his order dated 01.12.2011 has given the benefit to the appellant. Therefore keeping in view the aforesaid situation, the impugned order is not sustainable in law and is set aside. Further when the credit itself is not liable to be reversed, the question of payment of interest does not arise at all. Therefore the impugned order is set aside by allowing the appeal with consequential relief if any.
(Order pronounced in open court on 01/07/2016) S.S GARG JUDICIAL MEMBER pnr 2