The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit cannot reversed before clearance/removal of the goods.
Alfa Laval (India) Limited, the appellant assessee was a manufacturer of ‘equipment for heating, cooling and separation’ and, having procured certain ‘taxable services’ proceeded to take credit of tax in the invoices as permissible under rule 3 of CENVAT Credit Rules, 2004.
The assessee appealed against the order passed by the Commissioner of Central Excise for the recovery under Rule 14 of the CENVAT Credit Rules and the imposition of the penalty under Rule 15 of the CENVAT Credit Rules.
Jitendra Motwani, the counsel for the assessee contended that the machinery provision for disaggregation of credit did not require the exercise of option at the beginning of the year and that the self-contained scheme, for neutralization under rule 6(3A) of CENVAT Credit Rules did not envisage any timelines therein.
Bhilegaonkar Deepak, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was not eligible to avail of the CENVAT Credit and that the recovery raised by the revenue was as per the law and liable to be sustained.
The Bench observed that in the case of Hello Minerals Water (P) Ltd, the court held that the reversal of CENVAT credit amounts to non-taking of credit on the inputs. Hence the benefit had to be given to the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunal’s stage.
The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) held that no reversal of CENVAT Credit can be done before clearance or removal of goods.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
