By TIOL News Service

AHMEDABAD, JAN 31, 2015: BEFORE the CESTAT against the order of the lower appellate authority, the appellant submitted that out of the total confirmed demand of Rs.10,20,790/-being the credit allegedly availed without the support of any duty paying documents, an amount of Rs.4,36,718/-was available to them as CENVAT credit for which cenvatable documents were existing with the appellant during the relevant period but on which credit was not taken by the time the audit was undertaken.

The appellant further submitted that revised ST-3 return was also filed by them and credit was taken in the CENVAT account as if available before the visit of the audit. It is also submitted that an amount of Rs.5,80,856/-shown as wrongly availed was due to reconciliation errors.

The AR submitted that the credit of Rs.4,36,780/-was taken on the cenvatable documents for the earlier period and which was not available in appellant's CENVAT register during the visit of the Audit officers; that even if certain CENVAT credit was found to be admissible to the appellant afterwards the same could have been taken after the visit of the Audit officers.

The Bench observed that -

++ Appellant cannot take cenvat credit in the CENVAT account on a date earlier than the visit of the audit officers when such credit was not earlier reflected in the CENVAT account. If some credit was admissible on the basis of cenvatable documents existing with the appellant, but credit was not taken, then the same could have only been taken after the date of visit of the Audit officers.

++ It has been correctly held by the first appellate authority that if certain invoices were left out for which credit was not taken earlier then the same can be taken only as per the prescribed procedures and not on any date as per appellant's choice by modifying the records at will.

Holding that the demand of Rs.4,36,780/-along with interest is sustainable against the appellant, the appeal to this extent was rejected.

As for the remaining amount of Rs.5,80,856/-the Bench observed that the ground taken by the appellant was not properly appreciated by the adjudicating authority and, therefore, the matter is remanded to the said extent.

In the matter of imposition of penalties, the CESTAT observed that in case of clandestine removal cases also CENVAT credit is abatable from the total demand even at the appellate stage and, therefore, penalties under Section 76 and 78 of the Finance Act, 1994 are required to be set-aside under Section 80 of the Finance Act, 1994, even if extended period is invokable.

The Appeal filed was allowed to the above extent.

(See 2015-TIOL-225-CESTAT-AHM)