By TIOL News Service

NEW DELHI, JUNE 21, 2017: THE appellants are engaged in the manufacture of RF-Feeder cable and also availing credit of duty paid on inputs, capital goods etc.

At the time of clearance of their final product they also cleared certain duty paid, credit availed inputs as accessories. Due duty has been paid on the final product, inclusive of value of such accessories .

The dispute in the present appeal relates to the eligibility or otherwise to avail credit on certain items which were not used as accessories but were cleared separately, as such, to one of their clients.

The case of the appellant is that they have reversed the credit and, therefore, have not violated any provisions of CCR, 2004.

Revenue was not convinced and initiated proceedings which resulted in the impugned order of recovery of allegedly inadmissible credit of Rs.72,68,314/- and penalty.

Before the CESTAT pleading for setting aside of the impugned order, the appellant submitted that one of their clients requested only for the accessories and as such they cleared the same by reversing the credit availed on such inputs. Furthermore, since they have paid duty on sale value which is marginally higher than the value on which credit was taken, there is no loss to the Government and moreover the said procedure is sanctioned by Rule 3(5) of the CCR, 2004.

The AR reiterated the findings of the lower authorities.

The Bench considered the submissions and inter alia observed -

++ We note that the inputs received by the appellant were duty paid and they were recognizable as accessories of their final product. Some of them are not cleared as accessories and they cleared as such will not make them ineligible for credit . We note the appellant did discharge full liability on such inputs which were cleared as such by them. In fact, as claimed by the appellant, they have paid more than the amount of credit availed on the same, as there was marginal increase in the sale value.

++ It is clearly recorded that the appellants have not benefited at all in the process. In fact, they added mark up in the impugned inputs and have paid more duty than the credit taken. As such we find no justification to order for further recovery of credit on these inputs which were already reversed by the appellant at the time of clearances. There is no reason for imposing penalty on the appellant also.

The impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-2107-CESTAT-DEL)