2019 (10) TMI 763 - AT - Central Excise

CENVAT Credit - the credit was availed by the assessee on the basis of three invoices issued by the head office which is registered as ISD - HELD THAT - Admittedly the appellant would not be in a position to explain the correctness or otherwise of the credit availed by the head office for which records are being maintained at the head office only. Further the head office as a registered ISD is required to file returns etc. to their jurisdictional Service Tax Authorities. No objection seems to have been raised by the jurisdictional Service Tax Authorities of the head office. It is well settled law that assessment made at the end of the service provider cannot be re-opened at the end of the service recipient by resorting to objection relatable to the service provider. As such we find no justification for denial of credit to the appellant. Denial of credit - HELD THAT - The appellant contended that all the documents were seized by the Department and still lying in their custody. As such they are not in a position to explain the availment of the said credit unless such documents are returned to them. Time limitation - HELD THAT - The appellant s factory was visited by the officers on 05/08/2014 whereas show cause notices have been issued on 30/03/2016. Apart from the fact that the entire facts were being reflected by the appellant in their statutory records from August 2013 onwards which fact would not justify the invocation of longer period we also note that the show cause notice has been issued even after normal period from the date of visit of the officers - The Hon ble Allahabad High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS TRIVENI ENGINEERING AND INDUSTRIES LTD. 2015 (1) TMI 760 - ALLAHABAD HIGH COURT has observed that issuance of the show cause notice after a gap of twenty two months from the date of audit is barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Proper availment and transfer of Cenvat credit by the head office to the appellant's units.
2. Allegations of inappropriate transfer of credit and utilization for payment of duty.
3. Initiation of proceedings against the appellant based on discrepancies found during a visit by Central Excise officers.
4. Challenge of the show cause notice by the appellant on merits and limitation grounds.
5. Confirmation of demand and penalty by the Adjudicating Authority.
6. Appeal against the order before the Appellate Tribunal.

Issue 1: Proper Availment and Transfer of Cenvat Credit
The appellant, engaged in manufacturing Lead and Lead Alloy Ingots, received credit from the head office, registered as ISD, for payment of duty. The Revenue alleged improper availment and transfer of credit, leading to proceedings against the appellant. The Tribunal held that if the head office's credit was inappropriate, actions should be directed towards the head office, not the appellant. Since the correctness of the invoices was not disputed, denial of credit to the appellant was unjustified.

Issue 2: Allegations and Utilization of Credit
The Revenue raised objections regarding the credit availed by the head office and its transfer to the appellant's units. The appellant contended that the objections should be addressed to the head office, as they had utilized the credit based on legitimate invoices. The Tribunal emphasized that assessment at the service provider's end cannot be revisited at the service recipient's end without valid grounds, thus finding no justification for denying credit to the appellant.

Issue 3: Initiation of Proceedings
Following discrepancies found during a visit by Central Excise officers, proceedings were initiated against the appellant through a show cause notice. The appellant challenged the notice on both merits and limitation grounds, citing that the Revenue was aware of the facts since August 2013. The Tribunal noted that the notice issued in March 2016, after a gap of around nineteen months from the visit, was barred by limitation, as observed in a previous case by the Hon'ble Allahabad High Court.

Issue 4: Confirmation of Demand and Penalty
The Adjudicating Authority confirmed a demand against the appellant, which was challenged in the appeal. Additionally, a penalty was imposed, which the appellant contested. The Tribunal set aside the order, ruling in favor of the appellant-assessee based on the limitation aspect and lack of grounds for the demand.

Issue 5: Appeal Before the Appellate Tribunal
The appellant's appeal against the order was allowed, providing consequential relief. The Revenue also appealed, contesting the dropping of penalty on the Managing Director. However, as the demand against the manufacturer was set aside, the appeal seeking penalty imposition on the Managing Director was deemed not maintainable and rejected by the Tribunal.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD covers the issues involved, the arguments presented, and the Tribunal's findings on each aspect, ensuring a comprehensive understanding of the legal proceedings and outcomes.