2017 (10) TMI 886 - AT - Central Excise

CENVAT credit - transfer of capital goods to another unit - denial of credit on the ground that the said power press has not been found to be physically present at the appellant s premises but was installed at their Unit-II - case of appellant is that unit-I is also their own Unit doing exclusively job work for them and the goods manufactured at Unit-I are cleared by Unit-II on payment of duty - Held that - the issue is no more res integra and stand settled by decision in the case of S.G. Zaveri Pharmapack Vs. CCE, Mumbai 2007 (3) TMI 156 - CESTAT, MUMBAI , where it was held that Cenvat credit in respect of capital goods cannot be denied to the manufacturing unit if the same is installed at the job working premises - As there is no dispute that Unit-I and unit-II belong to the same assessee, and the goods after having been manufactured by the job worker are shifted to Unit-II from where they stand cleared on payment of duty, credit cannot be denied. Extended period of limitation - Held that - Having held that the issue involves legal interpretation and in the absence of any evidence reflecting upon the suppression or mis-statement on the part of the assessee that malafide intention, the extended period was not available to the Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Denial of Cenvat credit on a power press shifted between two units of the same assessee.
2. Justification for denial of credit based on the location of the capital goods.
3. Application of the longer period of limitation for raising and confirming the demand.

Analysis:
1. The appellant, engaged in manufacturing tractor parts, purchased a power press in the name of Unit-I but availed the credit in the name of Unit-II. The power press was shifted to Unit-I, which was exclusively doing job work for Unit-II. The denial of credit was based on the discrepancy between the unit where credit was availed and the physical location of the machine.

2. The Tribunal referred to various decisions to establish that denial of Cenvat credit for capital goods due to installation at a job worker's premises, belonging to the same assessee, is not justified. Precedents like S.G. Zaveri Pharmapack and Pooja Forge Ltd. emphasized that movement of capital goods between units of the same assessee should not be a ground for denial of credit. The Tribunal concluded that since both Unit-I and Unit-II belonged to the same assessee, denial of credit was not justified.

3. The Tribunal also addressed the issue of the longer period of limitation invoked for raising and confirming the demand. It noted that the appellant had reflected the credit in statutory records and filed statutory returns, indicating a bona fide belief in entitlement to the credit. The Tribunal found no evidence of suppression or misstatement by the appellant, leading to the view that the extended period was not available to the Revenue. Consequently, the appeal was allowed on merits and limitation, providing relief to the appellant.