2023 (10) TMI 1109 - AT - Central Excise

Reversal of CENVAT Credit - demand on the ground that the Appellant has not followed the ISD procedure for passing of the Cenvat Credit when the Invoices were issued by the vendors in the name of the Head Office - HELD THAT - There is no allegation in respect of goods on which Cenvat Credit has been taken by them. The utilization within the factory is also not in dispute. Admittedly, all the original documents have been produced by the Appellant before the Adjudicating Authority. Since the Appellant has clearly claimed that they have only one unit and there was no possibility of taking the Cenvat Credit in different units when the vendor has raised the invoice in the name of head office, there are no reason as to why the submission was not taken up for consideration by the Adjudicating Authority. The Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD 2016 (2) TMI 183 - GUJARAT HIGH COURT has held that even in the absence of any ISD Challan in such cases, Cenvat Credit cannot be denied. The CBIC Circular No.1063/2/2018-CX dated 16/02//2018 has accepted the decision of the Hon ble High Court of Gujarat. The confirmed demand under OIO set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the denial of Cenvat Credit by the Adjudicating Authority based on the failure to follow the Input Service Distributor (ISD) procedure for passing of the credit when invoices were issued in the name of the Head Office.

Summary:

Issue 1: Denial of Cenvat Credit based on ISD Procedure:
The Appellant was issued a Show Cause Notice seeking reversal of Cenvat Credit amounting to Rs. 2,06,06,882. The Adjudicating Authority confirmed a duty of Rs. 1,71,91,723 along with interest and penalty due to the Appellant's alleged failure to follow the ISD procedure for passing the Cenvat Credit when invoices were issued in the name of the Head Office.

Analysis:
- The Appellant initially faced allegations of producing only photocopies for the Cenvat Credit, but later provided all original copies during the adjudication process.
- The Adjudicating Authority confirmed the demand primarily on the grounds of not following the ISD procedure for passing the credit when invoices were in the name of the Head Office.
- The Appellant contended that as they only had one unit, the Cenvat Credit could not have been taken in different units when the vendor issued the invoice in the name of the head office.
- The Tribunal observed that there were no disputes regarding the goods on which the Cenvat Credit was taken and the utilization within the factory.
- Referring to a decision by the Gujarat High Court and a CBIC Circular, it was highlighted that denial of Cenvat Credit solely based on non-registration of ISD is a procedural irregularity and cannot be a ground for denial when all necessary records are maintained.

Decision:
- The Tribunal, following previous decisions and legal principles, held that the Appellant's Cenvat Credit cannot be denied based on procedural infractions.
- As the credit was deemed admissible, the Tribunal set aside the confirmed demand, stating that the question of demanding interest and imposing penalties does not arise.
- The impugned order was deemed unsustainable, and the Tribunal allowed the Appeal with consequential relief, if any, as per the law.

Conclusion:
The judgment focused on the denial of Cenvat Credit due to the Appellant's alleged failure to follow the ISD procedure, emphasizing that procedural irregularities should not lead to the denial of substantial benefits when all necessary records are maintained.