2017 (8) TMI 889 - AT - Central Excise

CENVAT credit - It appeared that the appellants had contravened the provisions of rules 3 and 4 of CCR inasmuch as they had availed and utilized the excess service tax credit in respect of their sister/related unit - Held that - the appellant s case is covered by the decision relied upon by the appellant in the case of Durferrit Asea Pvt. Ltd. Vs. CCE, Guntur 2010 (4) TMI 259 - CESTAT, BANGALORE , wherein it has been held that there is no compulsion to follow the procedure of Rule 7 of the Cenvat Credit Rules, 2004 to distribute the cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against rejection of appeal by Commissioner (Appeals)
- Availment of excess service tax credit for sister/related unit
- Allegation of contravening provisions of Cenvat Credit Rules, 2004
- Time-barred demand for service tax credit availed from 2008-09 to 2011-12
- Distribution of cenvat credit between two units
- Applicability of judicial precedents in the case

The appeal was directed against the rejection of the appellant's appeal by the Commissioner (Appeals) concerning the availment of excess service tax credit for a sister/related unit. The appellant held a Central Excise Registration Certificate for manufacturing Rotary Table and availed Cenvat Credit under the Cenvat Credit Rules, 2004. The Department Audit Team observed that the appellant had received various services common to both units, leading to the availing of excess service tax credit. The appellant's Assistant Manager accepted the irregular availment of Service Tax credit. A show-cause notice was issued, demanding repayment along with interest and penalty, which was confirmed by the original authority and upheld by the Commissioner, leading to the present appeal.

During the hearing, the appellant argued that the impugned order was unsustainable in law, citing binding judicial precedents and claiming the demand was time-barred. The appellant highlighted that their units were audited regularly, and there was no intention to evade duty. They emphasized the distribution of input services between the Peenya and Jalahalli units, asserting that even if the credit was distributed as per the show-cause notice, it would have been revenue-neutral. The appellant relied on specific decisions to support their argument.

The learned AR reiterated the findings of the impugned order, while the Tribunal considered the submissions and the judgments relied upon by the appellant. The Tribunal found that the appellant's case aligned with the decision in Durferrit Asea Pvt. Ltd. Vs. CCE, Guntur, where it was held that there was no compulsion to follow the procedure of Rule 7 of the Cenvat Credit Rules, 2004 for credit distribution. Therefore, the Tribunal concluded that the impugned order was not sustainable in law, setting it aside and allowing the appeal of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order based on the applicability of the judicial precedent cited and the lack of compulsion to distribute cenvat credit as per Rule 7 of the Cenvat Credit Rules, 2004.