2023 (4) TMI 915 - AT - Central Excise

Cenvat credit reversed - imposition of penalty - capital goods were used for manufacture of goods by the appellant - availment of cenvat credit by Unit-II - Extended period of limitation - HELD THAT - The credit reversal on which has been demanded has already been reversed by the appellant and subsequently availed in Unit-I. The admissibility of said credit in Unit-I has already been decided by Tribunal in M/S EIMCO ELECON INDIA LTD. VERSUS C.C.E. S.T. -VADODARA-I 2019 (1) TMI 173 - CESTAT AHMEDABAD where it was held that In the instant case, before availing the cenvat credit the appellant had applied for common registration and it is seen that no response was given by the Revenue on the application for common registration made by the appellant. The said application was neither accepted nor rejected. In these circumstances, it is apparent that the appellant had sought to follow all the requirements of the cenvat credit Rules, before availing the cenvat credit. Extended period of limitation - HELD THAT - It is also noticed that show cause notice has been issued more than 5 years after the availment of credit and therefore, is clearly beyond the limitation. Taking note of the fact that the said credit has already been reversed, there are no merit in the order, the same is set aside - appeal allowed.

Issues: Appeal against demand of reversal of cenvat credit and imposition of penalty.

Chronology of Events:
1. Imported capital goods by Unit-1 on 09.05.2005 & 07.07.2005.
2. Imported capital goods installed at Unit-II on 27.08.2005 & 14.09.2005.
3. Credit availed by Unit-1 on 23.09.2005 & 01.04.2006.
4. Application for common registration filed by Unit-II on 22.09.2005.
5. New registration granted for C-2 shed and H-2 shed on 21.04.2007.
6. Capital goods shifted to Unit-II on 21.04.2007 & 06.06.2007.
7. Reversal of credit by Unit-1 on 21.04.2007.
8. Availment of credit by Unit-II on 28.04.2007.
9. Decision to take re-credit by Unit-1 on 31.12.2007.
10. Reversal of credit by Unit-II on 31.12.2007.
11. Information provided to Superintendent on 03.05.2008.

Details of Judgment:
The appellant argued that the credit availed by Unit-I on 31.12.2007 was distinct from the credit availed by Unit-II on 28.04.2007. It was contended that as the goods were used for manufacturing, credit in Unit-I cannot be denied. The Tribunal had already allowed the credit for Unit-I in a previous order. The appellant also highlighted that the demand was beyond the limitation period, as the show cause notice was issued on 22.04.2013 for credit availed on 28.04.2007. The authorized representative relied on the impugned order. The Tribunal noted that the credit reversal demanded had already been reversed by the appellant and subsequently availed in Unit-I. Referring to previous cases, the Tribunal emphasized the requirement that capital goods must be used in or in relation to the manufacture of final products, even if used outside the factory. The Tribunal found no merit in the order due to the delay in issuing the show cause notice and the fact that the credit had already been reversed. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

(Separate Judgment by Judges: Not Applicable)

*(Pronounced in the open court on 13.04.2023)*

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