TMI Blog2013 (11) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... on value at the time of sale of the Cenvat credit availed inputs. The liability of the assessee at the time of removal of the Cenvat credit availed inputs as obsolete inputs or waste, which are nothing but the inputs cleared as such without having been used, would be the Cenvat credit originally taken – Thus, the duty demanded is correct - As regards, the demand of credit on the inputs found short, the same has also been correctly upheld on merits as these inputs have not been used in manufacture. Invocation of Extended Period of Limitation – Conflicting decisions – Held that:- The appellant have paid the amount strictly going by the wordings of Rule 3 (4) during the period of dispute, according to which on removal of cenvated inputs as such, an amount equal to duty on the transaction value was payable – With regard to the issue, there were conflicting decisions and for this reason – Following Continental Foundation Joint Venture vs. CCE, Chandigarh - I [2007 (8) TMI 11 - SUPREME COURT OF INDIA ] – when there is scope for entertaining doubt on account of conflicting judgments of the Tribunal, extended period under proviso to Section 11A (1) cannot be invoked – Thus, the short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt issued a show cause notice dated 24/8/04 on the basis that in respect of the Cenvat credit availed inputs valued at Rs. 1,29,07,905/-, the Cenvat credit of Rs. 22,20,259/- originally taken should have been reversed as against the duty on transaction value of Rs. 2,44,515/-, which had been paid. Similarly, the department was also of the view that in respect of inputs valued at Rs. 31,711/- found short the Cenvat credit of Rs. 5,074/- was required to be reversed. Accordingly, the show cause notice demanded total amount of Rs. 22,20,259/- on the inputs written off as waste and scrap and an amount of Rs. 5,074/- on inputs found short due to theft alongwith interest on these amounts and also sought imposition of penalty. The show cause notice was issued by invoking extended period under proviso to Section 11A (1). The show cause notice was adjudicated by Additional Commisisoner, vide order-in-original dated 30/03/05 by which the above amount of Cenvat credit demand was confirmed alongwith interest, penalty of equal amount was imposed under Section 11AC and the duty of Rs. 2,44,515/- paid on the clearances of the obsolete parts as waste and scrap and the duty of Rs. 5,074/- paid on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 4 (1) readwith the Valuation Rules, that the Board in its subsequent Circular dated 16/06/05 has further clarified that in case the inputs or capital goods are removed, as such, the provisions of Rule 3 (5) of Cenvat Credit Rules, 2004 shall be applicable and that the situation prior to 01/3/03 when Rule 57 AB (1) (c) of Central Excise Rules, 1944/ Rule 3 (4) of Cenvat Credit Rules, 2001/2002 were in force, shall continue to be governed by the rules in force at the relevant time, that in view of this, the appellant have correctly paid the duty on the transaction value, that the duty demand is also time barred as the entire information regarding the value of the Cenvat credit availed as inputs written of and dispose off as waste had been given under letter dated 17/06/03 while the show cause notice has been issued on 24/08/04, more than a year after the Department had received all the information, that Apex Court in the case of Tamil Nadu Housing Board vs. CCE, Madras reported in 1994 (74) E.L.T. 9 (S.C.), has held that when the law requires an intention to evade the payment of duty, then it is not mere failure to pay the duty, it must be something more, that is, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Cenvat credit availed components of television sets, which could not be used for manufacture, for the reason that the models for which the components were to be used, had become obsolete and were no longer being manufactured, had been cleared as such. Though the invoices mentioned these clearances as waste/scrap, the fact remains that these are the Cenvat credit availed inputs which had been cleared as such, without being used in manufacture for the reason the same had become obsolete. Therefore, these clearances of obsolete inputs have to be treated as the clearances of cenvated inputs, as such, and the amount payable in respect of the same would be governed by the provisions of Rule 3 (4) of Cenvat Credit Rules in force at that time, while during the period of dispute, i.e. August and September 2002 read as under :- when inputs or capital goods on which Cenvat credit has been taken are removed as such from the factory, the manufacturer of final products shall pay an amount equal to the duty of excise, which is leviable on such goods at the rate applicable on such goods on the date of such removal and on the value determined under sub-Rule (2) of Section 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided was that during the period of dispute when an assessee cleared Cenvat credit availed inputs as such, he was required to reverse the credit equal to the duty of excise on the basis of assessable value as had been determined by the original manufacturer at the time of removal of the goods i.e. the credit originally taken, not the duty on the transaction value at the time of sale of the Cenvat credit availed inputs. When this is the legal position determined by the Larger Bench, the ratio of Larger Bench would apply to this case also and, therefore, in this case the liability of the assessee at the time of removal of the Cenvat credit availed inputs as obsolete inputs or waste, which are nothing but the inputs cleared as such without having been used, would be the Cenvat credit originally taken. Therefore, I hold that so far as the merits of the case are concerned, the demand of Rs. 22,20,259/- is correct. As regards, the demand of credit of Rs. 5,074/- on the inputs found short, the same has also been correctly upheld on merits as these inputs have not been used in manufacture. 7. Next comes the issue of limitation. The removal of the cenvated inputs was during August and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant have paid the amount strictly going by the wordings of Rule 3 (4) during the period of dispute, according to which on removal of cenvated inputs as such, an amount equal to duty on the transaction value was payable. With regard to this issue, there were conflicting decisions and for this reason, this issue had been referred to Larger Bench till it was settled by the Larger Bench in the case of Eicher Tractors vs. Commissioner reported in 2005 (189) E.L.T. 131 (Tri. -LB). Apex Court in the case of Continental Foundation Joint Venture vs. CCE, Chandigarh - I reported in 2007 (216) E.L.T. 177 (S.C.) has held that when there is scope for entertaining doubt on account of conflicting judgments of the Tribunal, extended period under proviso to Section 11A (1) cannot be invoked. Therefore, from overall facts and circumstances of the case, I do not find anything from which it can be concluded that the short payment of the amount payable under Rule 3 (4) of the Cenvat Credit Rules was a deliberate act on the part of the assessee. Therefore, I hold that the longer limitation period in this case is not invokable. More so, when during visit of the audit team, all the information had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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