2012 (10) TMI 905 - AT - Central Excise

LTU - Cenvat credit - single excise registration - alleged that original consent form did not mention the three units that came up after March 2006 and hence all the transfers of Cenvat credit from the newly set up unit to older units are without authority of law and should be paid back Held that - In all the returns filed and different correspondence with the Commissioner (LTU) they were disclosing the existence of the new units and in fact sought permissions for transfer of credit from new units to old units which were given - Revenue is trying to deny a substantial benefit for some flimsy reason - procedural flow involved is a curable defect and credit is not deniable adopting a hyper technical approach adopted by Revenue stay granted.

Summary

Issues:
Manufacturers of automobile parts seeking benefit under Large Tax Payer Unit (LTU) scheme; Transfer of Cenvat credit between manufacturing units; Declaration of units set up after 2006; Denial of benefit due to procedural non-compliance.

Analysis:
The Appellants, manufacturers of automobile parts with multiple manufacturing units, sought benefits under the LTU scheme allowing transfer of Cenvat credit between units. The scheme, announced in 2005, aimed to streamline tax matters for manufacturers with multiple units. The Appellants, having units set up before and after 2006, expressed willingness to join LTU and disclosed details of all units to the Department in 2006.

One advantage of LTU was the ability to transfer Cenvat credit between units, enhancing operational flexibility. The Appellants, upon acceptance into LTU in New Delhi, began filing returns under LTU jurisdiction. Subsequently, they requested transfers of accumulated credit between units based on operational needs.

A dispute arose when the Revenue contended that the original consent form did not list units set up after March 2006. Consequently, the Revenue sought recovery of transferred Cenvat credit, amounting to Rs. 4,40,00,000/-. The Appellants challenged this demand, arguing that they had consistently disclosed new units in their correspondence and sought permission for credit transfers, which were granted.

The Appellants' Counsel highlighted a similar issue adjudicated by the Bombay High Court, where procedural non-compliance was deemed a curable defect, and credit denial was rejected. The Counsel urged the Tribunal to extend the benefit of the Bombay High Court decision to this case, emphasizing the Revenue's hyper-technical approach.

In response, the Revenue emphasized the importance of legal declarations, asserting that the Appellants failed to comply with the necessary disclosure requirements. Given the substantial amount involved, the Revenue sought a reasonable deposit for hearing the appeal.

Upon considering both arguments, the Tribunal found no reason to exclude the applicability of the Bombay High Court decision to the present case. Consequently, the Tribunal granted a waiver of the pre-deposit condition for the disputed dues and stayed the collection during the appeal's pendency. The case was scheduled for final hearing on 11-1-2012, given the matter's similarity to the previously decided issue by the Bombay High Court.