TMI Blog2016 (11) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... pted to avail credit without paying duty in the guise of accounting the same as ‘extra ordinary income’. The availment of credit without paying duty on the goods has resulted in a situation of loss of revenue. The facts of the case present an isolated situation and the contention of the appellant that writing off of the dues to the vendor is not the same as writing off of inputs and that Rule 3(5B) is not applicable is not tenable. Circular No.877/15/2008-CX dated 17-11-2008 regarding reversal of Cenvat credit in the case of trade discount, and therefore, is not at all applicable. Be that as it may, the circular clarifies that by way of discount if price is reduced and consequently duty is also reduced, the reduced excise duty only will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with interest. As there was no response, summons dated 11-07-2011 was issued to Shri B.K. Gurbani, Managing Director of appellant requiring him to submit the details of Cenvat credit taken on inputs written off and accounted in the year 2008-09 in the extraordinary income ledger along with copies of invoices and also other statutory records. 2. Thereafter, a show cause notice was issued to the appellants proposing to recover Cenvat credit of ₹ 3,40,194/- which was availed on the inputs and packing material, written off in their books of accounts, along with interest and also proposing for imposition of penalty. After due process of law the adjudicating authority, confirmed the demand of ₹ 3,40,194/- along with inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quated with writing off the stocks /inputs and therefore, provisions of Rule 3(5B) Cenvat Credit Rules, 2004 are not attracted. It is also submitted that the goods are physically available and appellants are very much in possession of these goods. The appellants have produced a Chartered Accountants certificate to establish that in fact the goods are physically available and that only the dues to the vendors have been written off. 3.5 Further, that the entire transaction was disclosed in their income tax returns and therefore, there is no suppression of facts on their part. That since the transaction does not attract the provisions of Rule 3(5B) Cenvat Credit Rules, 2004 they were under bonafide belief that there is no necessity to eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials, which is as under: S.No. Name of the party Invoice No/date Involice value Rs. Description of materials 1. M/s Venkateswara Flexo Pack Pvt. Ltd. 1081/ 24-10-2006 6,00,164/- Packing Materials 2. M/s Venkateswara Flexo Pack Pvt. Ltd. 371/ 14-06-2006 1,81,892/- Packing Materials 3. M/s Venkateswara Flexo Pack Pvt. Ltd. 847/ 19-09-2006 2,01,636/- Packing Materials 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make such payment at all. Pursuant to the Board resolution, they accounted an amount which is pending payment to vendors as extra ordinary income . In essence, the appellants have neither paid value of goods nor duty on the goods. The appellant have not actually paid duty on the goods. There is no specific plea put forward by appellants that though they did not pay value of the goods, the duty on the goods have been paid. The provisions of Rule 3(5B) Cenvat Credit Rules, 2004 for that matter the Cenvat credit scheme itself, come into application only if duty is paid. The vendor /supplier having not received the consideration, it is apparent that the duty on the goods has also not been paid by appellant. When the appellants have not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of taxable services, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules. 9. The intention of this provision is that when credit has been availed on inputs, and when such inputs are not used in the manufacture of final products, the assessee has to reverse the credit. The situation in the present case is also that, the appellants have no intention to use the inputs in manufacture. They have no intention to pay the value and duty of the inputs. When the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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