2015 (1) TMI 538 - HC - Central Excise

Denial of CENVAT Credit - Large Tax Payer s Unit (LTU) - revenue does not dispute that the assessee would be entitled to Cenvat Credit but a technical plea is taken and raised that subject units were not mentioned in the original application but were included in the revised or fresh list - Held that - facts mentioned in the decision in Sharda Motor Industries Ltd. (2011 (2) TMI 94 - BOMBAY HIGH COURT) decided by the Bombay High Court would be equally applicable to the facts of the present case insofar as the Kaanchipuram unit is concerned. No contrary contention, it is apparent, was raised before the Tribunal, which has merely followed the decision of the Bombay High Court in Sharda Motor Industries Ltd. (supra). In view of the aforesaid position, the present appeal does not have merit and has to be dismissed - Decided against Revenue.

Summary

Issues:
1. Consent for being administered in the Large Taxpayers Unit at Delhi.
2. Transfer of Cenvat Credit from units not mentioned in the original application.
3. Legal implications of setting up new units after the initial application.
4. Interpretation of LTU scheme and procedural requirements.

Analysis:

Issue 1: Consent for being administered in the Large Taxpayers Unit at Delhi
The respondent-assessee filed their consent to be administered in the Large Taxpayers Unit at Delhi, listing various units across the country. The appellant-revenue later issued a notification incorporating conditions for this consent. After more than two years, the Chief Commissioner accepted the application, and the respondent was to be assessed in the said unit. However, the respondent had set up new units after the initial application, leading to a revised list being submitted.

Issue 2: Transfer of Cenvat Credit from units not mentioned in the original application
The Adjudicating Authority noted that the respondent had transferred Cenvat Credit from units not initially mentioned in the application. The appellant contended that since these units were not in the original list, Cenvat Credit should not be granted. The legal dispute centered on the timing of the notification and the subsequent inclusion of these units in the revised list.

Issue 3: Legal implications of setting up new units after the initial application
The Bombay High Court's judgment in a related case highlighted that the acceptance of communication and transactions related to new units put the assessee in a favorable position. The court emphasized that while there was a procedural flaw in not separately mentioning the new units, this should not bar the assessee from LTU benefits. The court viewed the opening of new units as part of business development and emphasized the curability of such irregularities in the interest of the scheme.

Issue 4: Interpretation of LTU scheme and procedural requirements
The High Court observed that both the assessee and the revenue had proceeded on the understanding that LTU benefits extended to all units, including those set up after the initial consent letter. The court noted that the local excise authorities and LTU at Delhi had treated all units as governed by LTU. The court highlighted that any lapse in specific consent letters for new units was technical, and LTU policy required proactively addressing such issues. The court concluded that all units should be considered governed by the LTU scheme since inception.

In conclusion, the High Court dismissed the appeal, citing the applicability of the Bombay High Court's decision to the present case and emphasizing the technical nature of the issues raised by the revenue.