TMI Blog2023 (9) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... s initiated under Rule 14 of Cenvat Credit Rules read with Rule 3(5B) of the Cenvat Credit Rules is liable to be dropped. It is pertinent to note that the identical issue was considered by the Division Bench of the Tribunal in the case of M/S. ERICSSON INDIA PVT. LTD. VERSUS CCE, JAIPUR [ 2019 (3) TMI 776 - CESTAT NEW DELHI] wherein the Tribunal has held for reversal of cenvat credit on partial writing down of value of inputs , the provision was introduced only first time by amendment of Rule 3(5B) of Cenvat Credit Rules, with effect from 01.03.2011. Further, there was no provision prior to 01 March 2013 for recovery of cenvat credit and interest thereon under Rule 3(5B) etc. which was made applicable with effect from 01.3.2013 only, by virtue of Notification No. 3 of 2013-CE(NT) dated 01.03.2013. Though the Revenue has filed appeal against the decision before the Hon ble High Court of Rajasthan, but no stay has been granted by the Hon ble High Court. In terms of proviso to Rule 3(5B) itself if the said goods are used subsequently the appellant was entitled to take credit of the amount equivalent to the cenvat credit paid earlier. Further, the entire demand is based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to hold the inventory of input for next ten years. The said inventory retained by the appellant is in a good and usable condition but the same moves at a very slow pace. While the inventory is physically with the appellant and can be used, the appellant makes a provision for slow moving inventory in the financial records as a conservative accounting policy. The appellant makes provision for writing off 100% of the total value of stock of direct materials in excess of the estimated future demand for the next 12 months. On any subsequent creation of fresh demand of stock whose value was written off, the provision is released by the appellant. 3. During audit of the factory premises of the appellant, the department was of the view that the appellant is required to reverse Cenvat Credit availed on inputs which were written off as per Rule 3(5B) of the Credit Rules. 4. Accordingly, a show cause notice dated 16.03.2010 was issued to the Appellant proposing demand of Cenvat Credit of Rs. 98,74,704/- on the inputs whose value was written off during the period of January, 2006 to December 2009. 5. After following due process, the Ld. Commissioner vide the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently, the appellant was entitled to take credit of the amount equivalent to the Cenvat Credit paid earlier. She further submitted that when the slow moving items were used, the provision created for writing off their value was released in their books of accounts. During the relevant period, the appellant has released a provision of Rs. 2,53,92,631/- in respect of items whose value was written off/provision was made in their accounts after 11.05.2007. Hence, the appellant was not required to reverse the Cenvat Credit pertaining to inputs in whose relation the provision was released. For this submission, she relied upon the following decisions:- BCH Electric Ltd. v. Commissioner of Central Excise 2016 (344) ELT 469 (Tri.-Chan.) Padmini VNA Mechatronics (P) Ltd. v. CCE 2016 (1) TMI 730- CESTAT New Delhi She also submitted that the appellant was required to reverse only an amount of Rs. 16,70,774/- which was already reversed by the appellant on 01.05.2010 and the same was appropriated in the impugned order also. 10. Further, the appellant reversed the remaining Cenvat Credit of Rs. 41,84,705/- on 31.01.2012 and also simultaneously took the credit back i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tri. - Mumbai) CONCEPT PHARMACEUTICALS LTD. Ld. DR also submitted that the decision in the case of Ericsson India Pvt. Ltd. cited (supra), the department has filed appeal before the Hon ble High Court of Rajasthan in which the Hon ble High Court has issued notice to the respondent and the matter is subjudice before the Hon ble High Court. 12. After considering the submissions of both the parties and perusal of material on record, we find that the appellant as per the normal commercial practice in the automobile industry has made a provision for writing off the cenvat credit on inputs as per Rule 3(5B) of the Cenvat Credit Rules, 2004. During the audit, the department was of the view that the appellant is required to reverse Cenvat Credit availed on inputs which were written off as per Rule 3(5B) of the Cenvat Credit Rules. 13. Further, we find that during the relevant period, there was no recovery mechanism under Rule 3(5B) of the Cenvat Credit Rules and the explanation which was introduced vide Notification No. 3/2013 dated 01.03.2013 was from 01.03.2013 vide which it was provided that if the manufacturer of goods or the provider of output service fails to pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Accordingly, we hold that larger period for limitation cannot be invoked and no show cause notice was required to be issued. Accordingly, we hold that impugned order is not sustainable, and is set aside. Appeal is allowed with consequential relief. In this view of the matter, we set aside the demand, penalty and interest Though the Revenue has filed appeal against the decision before the Hon ble High Court of Rajasthan, but no stay has been granted by the Hon ble High Court. 15. Further, we also find that in terms of proviso to Rule 3(5B) itself if the said goods are used subsequently the appellant was entitled to take credit of the amount equivalent to the cenvat credit paid earlier. Further, we find that the entire demand is based on the entries reflected in the financial books of accounts and the balance sheet of the appellant, and there has not been any suppression and malafide on the part of the appellant, and therefore, the demand pertaining to extended period of limitation is not sustainable and the demand pertaining to normal period of limitation comes to only Rs. 2,17,251/-. 16. Further, we find that when during the relevant period, there was no recovery me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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