Department cannot raise demand without examining the reversal of Cenvat credit and calculating proportional credit

Last updated: 03 February 2023

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The CESTAT, Ahmedabad has ruled that the Revenue Department cannot raise a demand for 10% of the value of exempted goods if the assessee has already reversed the proportionate Cenvat credit. The tribunal emphasised that reversing credit is an option for the assessee, and the department cannot arbitrarily impose a specific method. The case was remanded because the department failed to examine the credit reversal and calculate the proportional amount, and a personal penalty was also set aside.

Court :
CESTAT, Ahmedabad

Brief :
The CESTAT, Ahmedabad in Sanofi India Limited v. C.C.E. & S.T.- SURAT-II [Excise Appeal No. 10583 of 2013 in Final Order No. A/10115-10117/2023 dated January 25, 2023] has held that, once the assessee had reversed the proportionate credit attributed to the exempted goods, no demand of 10% of the value of goods can be raised by the Revenue Department. Further held that, reversal of Cenvat credit is one of the option provided and it is upon the assessee to avail such option and the Revenue Department cannot arbitrarily choose any particular option and impose on the assessee. Remanded the matter back due to failure in examining the reversal of Cenvat credit and non-calculation of the proportionate credit. Moreover, set aside the personal penalty in the matter.

Citation :
Excise Appeal No. 10583 of 2013 in Final Order No. A/10115-10117/2023 dated January 25, 2023

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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