2018 (12) TMI 236 - AT - Central Excise

CENVAT Credit - HR Coils was being received through Rail and Railways were charging service tax for transportation of the same, which were shown in the Railway Receipt (RR) - Held that - The facts are undisputed in the present case the appellant had admittedly availed credit on the basis of RRs and subsequently produced the STTG certificate, which was relatable to the same RRs on the basis of which credit was availed. In such a scenario, the RRs get replaced with the STTG certificate thus fulfilling the requirement of law. The bare fact that the said certificate was not available at the relevant period when the law was changed, cannot be held to be a ground for denial of the credit in the absence of any allegation to the effect that the goods were not received by Railways or Railways have not paid the service tax or the appellant have not utilized the said goods in the manufacture of their final product. Raising of such a hyper technical ground by the Revenue is nothing but denial of justifiable claim of the assessee. In the present case M/s SAIL has given a certificate to the effect that they had not availed the credit in question. Further the Revenue s objection that the circular was issued in 2016 and as such would not be applicable for the period prior to that can also not be appreciated inasmuch as the circular is nothing but clarification of the law by the Board. Such clarifications, even though issued subsequently, would relate back to the law as was on the statute book even prior to the issuance of the circular. As such the objections raised by Revenue are unsustainable. Appeal allowed - decided in favor of appellant.

Issues:

1. Availment of Cenvat credit based on Railway Receipts (RRs) versus STTG certificate.
2. Validity of Circular No. 1048/36/2016-CX in relation to Cenvat credit availed by consignee.
3. Denial of credit by Revenue Authorities due to absence of STTG certificate at the time of taking credit.

Issue 1: Availment of Cenvat credit based on RRs versus STTG certificate

The appellant, engaged in manufacturing Steel Pipes and Tubes, procured HR Coils from various sources including SAIL, Rourkela. The Railways charged service tax for transportation of HR Coils, reflected in RRs used by the appellant to claim credit. Following an amendment in the Cenvat Credit Rules, the Railways were required to issue STTG certificates along with RRs for credit availment. Despite this, the appellant continued to avail credit based on RRs from July 2014 to March 2015. An audit objection prompted the appellant to obtain the STTG certificate from SAIL to regularize the credit. However, Revenue Authorities, through a show cause notice, rejected the certificate on the grounds of non-availability during credit claim and improper credit availed by the consignee. The Adjudicating Authority upheld the denial, emphasizing the STTG certificate not being in the appellant's name, leading to a demand of approximately ?10.58 lakhs, interest, and penalty.

Issue 2: Validity of Circular No. 1048/36/2016-CX in relation to Cenvat credit availed by consignee

The appellant cited Circular No. 1048/36/2016-CX, clarifying that if the consignor (SAIL) did not claim Cenvat Credit, the consignee (appellant) could rightfully avail it, contrary to Revenue Authorities' objection. The Circular, issued in September 2016, post-dated the period in question (July 2014 to March 2015). However, the Tribunal noted that the Circular merely clarified existing rules and should apply retrospectively. The Circular detailed the consignor's ability to request consignee-wise STTG certificates from Railways, allowing consignees to claim credit. As SAIL confirmed not availing the specific credit, the Tribunal deemed the objection by Revenue Authorities as baseless.

Issue 3: Denial of credit by Revenue Authorities due to absence of STTG certificate at the time of taking credit

The Tribunal found the Revenue's denial of credit unjustifiable. The appellant had initially availed credit based on RRs and later produced the STTG certificate corresponding to the same RRs. This replacement of RRs with the STTG certificate aligned with legal requirements. The absence of the certificate during the legislative change did not warrant credit denial unless there were issues with goods receipt, service tax payment by Railways, or utilization in manufacturing. The Tribunal criticized the Revenue's hyper-technical stance, emphasizing the rightful claim of the appellant. Consequently, the Tribunal set aside the impugned order, allowing the appeal with relief to the appellant.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD highlights the issues surrounding Cenvat credit availment based on RRs versus STTG certificates, the validity of Circular No. 1048/36/2016-CX, and the unjust denial of credit by Revenue Authorities, providing a comprehensive understanding of the legal intricacies involved in the case.

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