2022 (9) TMI 124 - AT - Central Excise

Jurisdiction - genuineness of transfer of Cenvat Credit to GST Tran-1 - competence of the Commissioner Appeal who has passed the impugned order on the ground that the Commissioner (Appeals) as Central Excise officer has no competence to adjudicate the issue with respect to the provisions of CGST Act, 2017 - HELD THAT - The foremost perusal of the order under challenge, the preamble thereof clarify that the Order-in-Appeal has been passed by Sugrive Meena, Commissioner (Appeals) not only for the Central Excise but also for the CGST, Jaipur. This particular perusal makes it clear that the contention of Department is wrong and is therefore not acceptable. Coming to the another contention that order assailed in the impugned appeal pertains to the provisions of CGST, it is observed that the amount in question admittedly is the closing balance of Cenvat Credit for the month of June, 2017 as is apparent from para 2 of the impugned Show Cause Notice dated 19.11.2018 - Admittedly, that is the amount reflected in the ER-1 return only. Admittedly, the revised return is also the excise return. Thus it becomes clear that the remaining amount involved herein is not the amount with respect to the provisions of CGST but is the Cenvat Credit balance lying with the appellant of the excise law era though proximate to the time of launch of new GST law. The said act came into force from 1.7.2017 and the amount in question is of June 2017. This perusal falsify the another contention raised by the department. The fact still remains that the amount in question is the amount for the period of which Central Excise Act is not applicable. Department has failed to produce on record to show that figures mentioned in the revised return of 16.7.2017 about the amount lying as balance of Cenvat Credit were correct figures and thus credit availed on Rs. 59,86,899/-. instead of Rs.55,15,048/-, that is the amount for an amount Rs.4,71,851/- is wrongly availed - keeping in view that by the time this return was revised the appointed date has already arrived, whereafter the fund as shown in the ER-1 was to be transferred into TRANS-1. The amount of credit in question being taken on the amount of return of 10.7.2017 and that the return is impressed as correct also in absence of any evidence by the department to falsify the same and in absence of any response of the department to the intimation letter dated 17.7.2017, the findings confirming the reversal of the impugned amount are held to be are not sustainable. The contentions of the department challenging the competence of Commissioner (Appeals) are set aside - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Competence of the Commissioner (Appeals) to adjudicate on provisions of CGST Act, 2017.
2. Correctness of disallowing Cenvat Credit and imposition of penalty.
3. Applicability of Cenvat Credit rules under CGST Act, 2017.
4. Admissibility of ITC on closing balance of Cenvat Credit prior to 1.7.2017.

Analysis:

Issue 1: Competence of the Commissioner (Appeals)
The Department challenged the competence of the Commissioner (Appeals) to adjudicate on the provisions of the CGST Act, 2017. However, the Order-in-Appeal was passed by the Commissioner (Appeals) for both Central Excise and CGST, Jaipur, indicating the Commissioner's authority to decide on the matter, which was deemed acceptable.

Issue 2: Disallowance of Cenvat Credit and Penalty
The Department disallowed Cenvat Credit based on discrepancies in the appellant's returns, alleging an excess carrying forward of Cenvat Credit. The initial order disallowed a specific amount and imposed a penalty. The appeal upheld the disallowance but set aside the penalty. The subsequent review order questioned the jurisdiction of the Commissioner (Appeals) under the CGST Act, leading to appeals by both the Department and the appellant.

Issue 3: Applicability of Cenvat Credit Rules
The appellant filed a revised return due to a clerical mistake, indicating the closing balance of Cenvat Credit. The appellant argued that the amount in question was part of the excise law era and not under the CGST Act. The Adjudicating Authority wrongly held that the appellant availed Cenvat Credit under the CGST Act, failing to consider the transition provisions allowing credit on amounts prior to the CGST Act's enforcement.

Issue 4: Admissibility of ITC on Cenvat Credit
The appellant intimated the department about the clerical error in the revised return but had no option to correct it under the new CGST Act. The Department failed to provide evidence to refute the correctness of the figures in the returns. The Tribunal found that the appellant was entitled to the Cenvat Credit amount, as the department's findings were not sustainable due to lack of evidence and response to the appellant's intimation.

In conclusion, the Tribunal set aside the contentions challenging the Commissioner's competence and allowed the appeal filed by the assessee while rejecting the appeal filed by the Department.