Custom, Excise & Service Tax Tribunal
M/S. Rital India Pvt. Ltd vs Cce, Bangalore on 9 October, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/20858/2017 [Arising out of Order-in-Appeal No.55/2017/LTU dt. 22/03/2017 passed by Commissioner(Appeals), LTU, Bangalore] M/s. Rital India Pvt. Ltd. Appellant(s) Versus CCE, Bangalore Respondent(s)
Appearance:
Shri Ramasubramanian, S., Chartered Accountant For the Appellant Shri N. Jagadish, Superintendent(AR) For the Respondent Date of Hearing: 22/09/2017 Date of Decision: .................. CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. / 2017 Per : S.S GARG The present appeal is directed against the impugned order dt. 22/03/2017 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) has rejected the appeal of the appellant and upheld the Order-in-Original.
2. Briefly, the facts of the present case are that the appellant is registered with Central Excise department and are engaged in the manufacture of parts of electrical cabinet, parts of telecom racks falling under Chapter 85 and parts of IT racks and accessories, industrial cooling units and parts falling under Chapter 84 of the Central Excise Tariff Act. For the financial year 2014-15, the appellant had created a provision in the books of accounts for writing down the value inputs. The entry in the books of accounts was passed on 19/11/2015. However, effect of the entry was given in the financial statements for the year ended 31st March, 2015. The appellant reversed CENVAT credit amounting to Rs.32,52,115/- on 29/07/2015 along with interest of Rs.2,17,515/-. However later it was realised that the interest was not liable to be paid for the reason that the provision entry in the books of accounts was passed only on 19/11/2015 and the liability to reverse CENVAT credit arose only on 19/11/2015. In view of this, the appellant filed an application for refund of interest paid. The original authority after following the due process of law vide Order-in-Original dt. 15/12/2016 rejected the refund and aggrieved by the said order, appellant filed appeal before the Commissioner(Appeals) who also rejected the appeal. Hence the present appeal.
3. Heard both the parties and perused records.
4. Learned consultant for the appellant submitted that the impugned order is not sustainable in law as the same has been passed by wrongly misinterpreting the provisions of Rule 3(5B) and Rule 14 of the CENVAT Credit Rules, 2004. He further submitted that the provision to write off the value of inputs in the books of accounts cannot be made as on 31/03/2015 itself as this requires evaluating complete inventory and work in progress as on 31/03/2015. He also submitted that in the journal entry for writing off the value of the inputs was passed on 19/11/2015, the effective date is 31/03/2015 only inasmuch as the entry has been given effect to the balance sheet as on 31/03/2015. He also submitted that in practice, the provision entry to write off the value of the input is generally passed after an entry is followed and physically verified and normally the valuation of inventory is carried out at after the end of the financial year and does not practically possible to pass all the accounting entries within 31st March of the financial year. He also submitted that accounting standards and Income Tax provisions permit an assessee to pass entry after 31/03/2015 giving effect to balance sheet as on 31/03/2015 and in view of this, the entry was passed by the appellant on 19/11/2015 giving effect to balance sheet as on 31/03/2015 which is valid in law. He further submitted that in their case, the entry for writing off the value of the inputs in the books of accounts was passed only on 19/11/2015 and therefore the CENVAT credit should have been reversed only on 19/11/2015 but the appellant reversed the CENVAT credit on 29/07/2015 on adhoc basis and a provisional balance sheet as at 31/03/2015 was prepared by July 2015. He further submitted that the reversal was made on 29/07/2015 itself i.e. well before the entry was passed in the books of accounts and therefore the appellant was not liable to pay interest as there was no delay in the reversal of CENVAT credit and the interest paid inadvertently is required to be refunded. He further submitted that as on 31/03/2015, the cumulative unutilised CENVAT credit balance was Rs.1,98,71,286/- and for the period 31/03/2015 to 31/07/2015, the CENVAT credit balance in the CENVAT register was always more than Rs.32,52,115/-. He also submitted that since the balance lying in the CENVAT credit account is more than the duty to be reversed, interest under Rule 14 of the CCR is not liable to be paid.
5. On the other hand learned AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties and perusal of material on record, I find that as per Rule 14(1)(i) of the CCR where CENVAT credit has been wrongly availed but not utilised, the same shall be recovered and the provisions of Section 11A of the Central Excise Act or Section 73 of the Finance Act shall apply mutatis mutandis for recovery of such amount. Further I also find that as per Rule 14(1)(ii), where the CENVAT credit has been taken wrongly and has been utilised, the same shall be recovered along with interest and the provisions of Section 11A and Section 11AA of the Excise Act or Section 73 and 75 of the Finance Act shall apply mutatis mutandis for recovery of such dues. Further I find that on perusal of Rule 1491)(i) and Rule 14(1)(ii), it is clear that when the CENVAT credit has been wrongly availed but not utilised, interest cannot be recovered. In the instant case, the Departments case is that the appellant was liable to reverse CENVAT credit as on 31/03/2015. However, it reversed the credit oly on 29/07/2015. Further I also find that for the period 31/03/2015 to 29/07/2015, appellant had sufficient balance in the CENVAT credit account and they have not utilised the CENVAT credit and therefore in view of the provisions of Rule 14(1)(i), appellants are not liable to pay interest and the interest paid by them is liable to be returned to them. Therefore I set aside the impugned and allow the appeal of the appellant with consequential relief, if any.
(Order pronounced on ...............) S.S GARG JUDICIAL MEMBER Raja....
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