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2018 (7) TMI 529 - AT - Central ExciseCENVAT credit - duty paying documents - rejected goods - it appeared that the appellant have availed suo motu credit without the cover of documents specified in Rule 9 of CENVAT Credit Rules - it was alleged that appellant availed CENVAT Credit twice in respect of the same inputs - case of appellant is that the entire exercise is Revenue neutral - suppression of facts. Whether the appellant can avail CENVAT credit on their own invoices issued in the name of their vendor rejecting the inputs, which were actually not cleared from the plant but remained inside the plant and whether the appellant has availed double CENVAT Credit on some goods? - whether the extended period of limitation has been rightly invoked by the department? Held that:- There is no doubt that the appellant have adopted a completely wrong practice. If the inputs were urgently required for production of two wheelers, the appellant need not prepare Invoice for sending the rejected materials back to the vendors and instead ought to have rectified the same in-house. They were also not required to reverse the credit and re-credit in their accounts. Even if they prepared the invoices, they ought to have cancelled the same and have to inform it to the jurisdictional commissioner. The Appellant after receiving the inputs from their suppliers availed Cenvat credit of Central Excise duty mentioned in the invoice as payable on such inputs, although it was not yet paid, in terms of Rule 8(2) of the Central Excise Rules, 2002. After the rejection of inputs, invoice was prepared for return of these inputs to its supplier creating liability of reversal of Cenvat credit availed on such inputs. However, the inputs remained in the plant itself and after due rectification, were again taken into their inventory and again Cenvat Credit on these inputs is availed in terms of Rule 16 (1) of the Central Excise Rules, 2002 on the basis of their own invoices. This shows that although the original duty liability on the inputs payable by the supplier is yet to be paid, but Cenvat credit availed under Rule 8(2). The fact about the availment of credit in respect of the rejected inputs on the basis of Appellant’s own invoices issued in the name of their vendors was never brought to the knowledge of the department. I have been informed that the Appellant in their monthly ER-1 returns had only shown the quantity of rejected material and duty debited against the same. They never disclosed the fact about in-house rectification of the Inputs by the Appellant and second time credit in respect of such Inputs. The said fact came into the knowledge of audit team at the time of audit only, otherwise the Appellant would have continued with this practice. This shows the mala fide intention of the Appellant. - extended period has been rightly invoked. Liability of Interest and penalty - held that:- Since the extended period has rightly been invoked by the department, therefore the appellant is also liable to pay interest and penalty - the matter is remanded for re-quantification of interest and penalty. Appeal allowed by way of remand.
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