2017 (12) TMI 320 - AT - Central Excise

CENVAT credit - input service - repair, renovation and modernization of machinery - repair and renovation of factory building and repairing of outside godown - carry bags which were used for export of Cigarettes - also some invoices could not be located - Held that - Cenvat credit of Service Tax ₹ 2,27,102/- paid on input service utilized for repair, renovation and modernization of machinery is allowed - Cenvat credit of Central Excise duty paid on carry bags which were used for export of Cigarettes is also allowed. I also accept the grounds related to Cenvat credit of ₹ 1,30,595/- which was related to the invoices which could not be located since the same was debited along with interest before issue of the said Show Cause Notice dated 07/05/2014. Therefore, there was no legal requirement to show cause and adjudicated the same. CENVAT credit in respect of ₹ 53,234/- on works contract service is not allowed. Appeal allowed in part.

Summary

Issues:
1. Admissibility of Cenvat credit for input services used for repair, renovation, and modernization of machinery.
2. Admissibility of Cenvat credit for input services used for repair and renovation of factory building and outside godown.
3. Treatment of untraceable input invoices under Section 11A(2B) of the Central Excise Act, 1944.
4. Denial of Cenvat credit on carry bags used for export of Cigarettes.

Analysis:

1. The appellant challenged the denial of Cenvat credit amounting to ?2,27,102 for input services used in machinery repair, renovation, and modernization. The Tribunal found merit in this ground, ruling in favor of the appellant and allowing the credit.

2. Another issue involved the admissibility of Cenvat credit worth ?53,234 for input services utilized in the repair and renovation of the factory building and outside godown. The Tribunal noted that reliance on a specific circular was not tenable, resulting in the rejection of this claim for credit.

3. The case also addressed the treatment of ?1,30,595 related to untraceable input invoices. The appellant contended that the amount was reversed before the issuance of the Show Cause Notice. The Tribunal agreed with this argument, citing Section 11A(2B) of the Central Excise Act, 1944, and ruled in favor of the appellant, allowing the credit.

4. Lastly, the appellant disputed the denial of Cenvat credit amounting to ?4,068 on carry bags used for exporting cigarettes. The Tribunal sided with the appellant, stating that since the receipt of the bags was undisputed, the credit could not be denied. Consequently, the Tribunal allowed this credit as well.

In conclusion, the Tribunal partially allowed the appeal, granting relief to the appellant on specific grounds related to Cenvat credit while rejecting others. The penalty of ?4,15,001 was set aside, and the appeal was partially allowed based on the findings and conclusions outlined in the judgment delivered by Mr. Anil G. Shakkarwar, Member (Technical) of the Appellate Tribunal CESTAT ALLAHABAD.