The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) remanded the matter of cenvat Credit reversal on electricity wheeled out as there were no records about the correctness of this amount as it confirms the demand by application of 6% of the value of the electricity wheeled out.
M/s Chunar Cement Factory, the Appellant is engaged in the manufacture and sale of Portland Pozolana Cement. They are also availing facility of Cenvat credit. Appellant have captive power plant for generation of electricity, out of total power generated, some portion is wild out to M/s UPPCL and M/s NPCL. Certain common inputs and input services have been used by the appellant i.e. GTA, Maintenance or repair services, Manpower Supply Services, Security, Rent-acab, cargo handling and Consultancy Services and credit received through ISD for generation of Electricity consumed captively for production of PP Cement and for surplus electricity sold to M/s UPCP, Jaypee Chunar Cement Products and Kanpur Fertilizers during the period from April, 2015 to February, 2016.
Appellant did not follow the procedure as per Rule 6 (3) of the Cenvat Credit Rules and during the special audit of the records of the appellant as per Section 14AA of Central Excise Rules, 1944 it was observed that party was not maintaining separate accounts in this regard. The appellant have wheeled out electricity to the tune of 74323950 units valued at Rs.48,28,28,934/- without discharging their liability amounting to Rs. 2,89,69,736/-. Out of this the party have reversed total of Rs.44,05,397/-. Thus the balance amount of Rs.2,45,64,339/- (Rs. Two Crore Forty Five Lakh Sixty Four thousand Three Hundred Thirty Nine only) has not been paid by them. Thus appellant violated the provisions as contained in Rule 4,6 and 9 of the Cenvat Credit Rules, 2004,
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A show cause notice dated 29.04.2016 was issued to the appellant asking them to show cause as to why amount of Rs.2,89,69,736/- (Rs. Two Crore Eighty Nine Lakh Sixty Nine thousand Seven Hundred Thirty Six only) should not be demanded and recovered from them under proviso to Section 11A(4) of the Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules 2004. The party are also required to show cause as to why an amount of Rs. 44,05,397/- deposited/ reversed by the party, should not be adjusted/ appropriated against the said demand.
It was observed that appellant has reversed an amount of Rs. 44,05,397/- which has been appropriated by the Original Authority, this reversal was made even prior to issuance of show cause notice. If this reversal was the actual reversal was to be made in terms of Rule 6 (3) of the Rules and in view of the decision of Supreme Court in the case of M/s Maruti Suzuki Ltd. (supra) then there could have been no case for imposition of penalty.
A two member bench of P.K. Choudhary, Member (Judicial) and Sanjiv Srivastava, Member (Technical) viewed that impugned order do not record anything with regard to correctness of this amount as it confirms the demand by application of 6% of the value of the electricity wheeled out. In case for ascertaining the credit amount that was to be reversed by the appellant.
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While partly allowing appeal, the Tribunal remanded the matter to the Original Authority in case the amount is within the amount already reversed, the proceedings should be closed without any final liabilities. Shri Atul Gupta appeared for the Appellant and Smt Chitra Srivastava authorised representative appeared for the Respondent
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