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2019 (1) TMI 1226 - AT - Central ExciseDemand of Interest and penalty - excess availment of CENVAT Credit - excess availed CENVAT Credit reversed prior to its utilisation - removal of inputs as such - Held that:- It is not in dispute that the inputs which were received by the appellant and on which they have taken CENVAT Credit in the first place were for use in manufacture of the final products by the appellant. Therefore, at that stage, it cannot be said that the credit has been wrongly availed. It would have been a different case if they are availed CENVAT Credit on some inputs on which they could not have availed CENVAT credit at all. Such case would have been squarely covered under Rule 14 and Rule 15. The inputs are used for the purposes other than manufacture, without maintaining separate accounts for such inputs but after reversing, a proportionate amount of CENVAT Credit availed on them and this cannot be considered as removal of inputs as such. the term (factory or premises) does not appear to have been defined in this sub rule. Therefore, all that can be concluded is that if inputs on which credit has been taken or removed for other than the purposes for which credit was taken, proportionate amount of CENVAT Credit needs to be reversed. It is undisputed that the appellant in this case has done so. Under these circumstances, it is hard to say that the reversal of CENVAT Credit under Rule 3(5) by the appellant of the proportionate amount of credit taken on the inputs used for purposes other than the manufacture, amounts to incorrect availment of CENVAT Credit, as conceived under Rule 14 of CCR 2004. The amount of credit reversed by the appellant on their own is a reversal under Rule 3(5) of CCR 2004 and not a wrong availment of input credit as contemplated in Rule 14 of CCR 2004 - the demand of interest under Rule 14 and imposition of penalty under Rule 15 in the particular factual matrix, not sustainable and need to be set aside. Appeal allowed - decided in favor of appellant.
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