2018 (7) TMI 1927 - AT - Central Excise

CENVAT Credit - credit denied on the ground that goods had not been manufactured and cleared from the factory of Ishaan Technologies Private Limited - Rule 7(1) of the Cenvat Credit Rules, 2002 - HELD THAT - The instant proceeding is a consequence of investigation initiated by DGCEI authorities against Ishaan Technologies Private Limited, Byrnihat, Meghalaya and simultaneously against all the units of Manaksia Limited, including the appellant and its associates/sister concerns and that on the basis of the evidences on record, similar show cause notice was issued to the Kutch unit of Manaksia Ltd. at Gujarat alleging wrong availment of cenvat credit - Hon'ble Gujarat High Court in the case of Commissioner of Excise and Customs Vs. Manaksia Limited 2010 (4) TMI 1046 - GUJARAT HIGH COURT has held that even if the alternator may have been manufactured at Delhi as contended by the revenue, as long as the duty liability of such alternator had been discharged by the supplier, entitlement of the respondent company to avail of CENVAT credit in respect of the duty paid on the capital goods in question cannot be disputed. In the instant case also there is no dispute that the subject machineries were received at the appellant s factory at Barjora, Bankura, West Bengal. It is also not disputed that the duty on the said machineries stands paid by Ishaan Technologies Private Limited and that the goods were received under the cover of Central Excise invoices issued by the said company. It is also not the case of the Revenue that the appellant had availed higher credit than the duty actually paid as reflected in the duty paying documents. In such circumstances, as held by the Hon'ble Gujarat High Court, the requirement of Rule 7(1) of the Cenvat Credit Rules, 2002 stands duly satisfied - the appellant s entitlement to avail Cenvat credit in respect of the duty paid on the subject goods is legal and valid and cannot be denied. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of Cenvat credit by Commissioner of Central Excise.
2. Allegation of evasion of Central Excise Duty by Ishaan Technologies Private Limited.
3. Misuse of Notification No. 32/99-CE.
4. Allegations against Manaksia Limited and its sister companies.
5. Similar show cause notice issued to the appellant's unit in Kutch, Gujarat.
6. Decision of the Ahmedabad Bench of the Tribunal and Hon'ble Gujarat High Court.
7. Justification of the appellant regarding the investigation and show cause notice.
8. Findings of the Tribunal in the case of Manaksia Limited Vs. Commissioner of Central Excise, Rajkot.
9. Legal validity of the appellant's entitlement to Cenvat credit.

Analysis:

1. The appeal was filed against the disallowance of Cenvat credit amounting to ?2,98,06,375/- by the Commissioner of Central Excise, Bolpur Commissionerate. The disallowance was based on the misuse of Notification No. 32/99-CE by Ishaan Technologies Private Limited, leading to irregular Cenvat credit passed to various customers, including Manaksia Limited and its sister companies.

2. The investigation revealed that Ishaan Technologies Private Limited misused the notification by not manufacturing excisable goods and over-invoicing products. A show cause notice was issued, alleging that goods were not actually manufactured by Ishaan Technologies Private Limited, resulting in wrongful Cenvat credit availed by the appellant. The Commissioner confirmed the allegations and demand made in the show cause notice.

3. The appellant argued that a similar show cause notice issued to its unit in Kutch, Gujarat, based on the same investigation, was decided in their favor by the Ahmedabad Bench of the Tribunal and upheld by the Hon'ble Gujarat High Court. The appellant contended that the present case should be decided following the precedent set by the Gujarat High Court.

4. The Tribunal, in the case of Manaksia Limited Vs. Commissioner of Central Excise, Rajkot, found discrepancies in the allegation that capital goods were not manufactured by Ishaan Technologies Private Limited. The Tribunal allowed the appeal, setting aside the Commissioner's order and providing relief to the appellant.

5. Following the decision of the Hon'ble Gujarat High Court, the Tribunal held that the appellant's entitlement to Cenvat credit for duty paid on the subject goods was legal and valid. The Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant.