2017 (11) TMI 12 - AT - Central Excise

CENVAT credit - inter unit transfer of input - main reason for seeking reversal of Cenvat credit in Unit-II is that the credit has been availed in June, 2011 and in the same month, no manufacture has been reflected - Held that - there is no dispute about the fact that the imported goods have suffered payment of CVD and the same has been received in Unit-I and subsequently transferred to Unit-II. The invoice transferring such credit to Unit-II is not being disputed for its authenticity. The explanation offered by the appellant for not reflection of any production in the month of June is also plausible and acceptable. A substantial benefit of Cenvat credit available to Unit-II cannot be denied for the procedural delays in issue of invoice and debiting the duty at Unit-I. It is also seen for delayed payment of duty at Unit-I interest has already been paid. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over Cenvat credit availed by Unit-II based on invoice from Unit-I; Disallowance of Cenvat credit by the department due to NIL production in Unit-II in June 2011; Justification of delayed transfer of credit from Unit-I to Unit-II; Authenticity of documents supporting the claim of raw material receipt and usage in Unit-II.

Analysis:
The appeal pertains to a dispute regarding Cenvat credit availed by Unit-II based on an invoice issued by Unit-I for the transfer of imported raw material. Unit-I imported raw material, cleared it after paying countervailing duty, and then transferred it to Unit-II for manufacturing final products. The department disallowed Cenvat credit in Unit-II for June 2011 due to NIL production shown in the returns. The appellant argued that the raw material was received and used in May 2011, with credit transferred in June 2011 after receiving the bill of entry. The appellant also paid interest for the delayed invoice issuance.

During the hearing, the appellant presented evidence supporting the receipt and usage of raw material in Unit-II in May 2011, with final product clearance in the same month. The tribunal noted that the imported goods had indeed suffered CVD, were transferred from Unit-I to Unit-II, and the invoice for credit transfer was authentic. The explanation for the absence of production in June 2011 was deemed plausible. The appellant paid interest for the delayed invoice issuance, further supporting their claim.

After reviewing the documents and evidence provided, the tribunal found no justification for the reversal of Cenvat credit in Unit-II. The impugned order disallowing the credit was set aside, and the appeal was allowed. The tribunal emphasized that procedural delays in issuing the invoice and debiting duty at Unit-I should not deny Unit-II the substantial benefit of Cenvat credit.