2017 (2) TMI 1073 - AT - Central Excise

CENVAT credit - transfer of credit - denial on the ground that Credit availed on the capital Goods at their new factory premises, however, the capital goods continued to be remain in the old factory premises - Rule 10 of the CCR 2004 - Held that - as per the provisions of the 10(1), the transfer of Cenvat credit is available only if the manufacturer shifts his factory to another site - However, the appellant have themselves stated that they have continued manufacturing activity at old premises, solely for them; that the old premises was engaged in doing jobs works for the new premises. In this context the appellant plea regarding shifting of their factory to the new premises is not acceptable as manufacturing activity is carried out independently at both the premises - denial of credit justified. CENVAT credit - Input Services - maintenance of Wind Mills outside the factory premises - Held that - the issue has been settled by the Larger, Bench of the Tribunal in the case of Parry Engg & Electronics Pvt. Ltd. Vs. CCE & ST, Ahmedabad-I, II &III 2016 (1) TMI 546 - CESTAT AHMEDABAD , where it was held that credit is eligible on maintenance or repair services of Windmills, located away from the factory - credit allowed. Penalty u/r 15 read with Sec. 11AC is accordingly, reduced to the extent of inadmissible of Cenvat Credit on Capital goods - benefit of discharging 25% of the penalty is extended to the appellant subject to the fulfilment of conditions laid down under the said provisions. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Denial of CENVAT credit on capital goods not transferred to new premises.
2. Admissibility of CENVAT credit on input services for Wind Mills maintenance.
3. Penalty imposition under Rule 15 and Sec. 11AC.

Analysis:

1. The appeal was filed against the order passed by the Commissioner (Appeals) regarding the denial of CENVAT credit on capital goods and input service tax credit. The appellant availed CENVAT credit on capital goods at the new factory premises but did not transfer the goods to the new premises, as required by Rule 10 of the CCR 2004. The Ld AR for Revenue argued that the appellant did not follow the prescribed procedure for transferring the credit. The Ld Commissioner (Appeals) upheld the denial of credit on capital goods, stating that the appellant continued manufacturing at the old premises independently, without shifting the capital goods to the new premises. The Commissioner also noted that the appellant failed to comply with Rule 10(1) and Rule 10(3) of the CCR 2004. The Tribunal found no discrepancy in the Commissioner's decision and upheld the denial of credit amounting to &8377; 22,27,974.

2. Regarding the admissibility of CENVAT credit on input services for Wind Mills maintenance, the Tribunal referred to a previous decision by the Larger Bench in Parry Engg & Electronics Pvt. Ltd. Vs. CCE & ST, which established the eligibility of such credit. The Tribunal held that the CENVAT credit of &8377; 7,56,612 availed on the input services for Wind Mills maintenance was admissible. The penalty imposed under Rule 15 read with Sec. 11AC was reduced due to the inadmissibility of CENVAT credit on capital goods. However, the Tribunal noted that the authorities had not considered granting a 25% penalty reduction as per the conditions under Sec. 11AC of the Central Excise Act. Consequently, the appellant was granted the benefit of a 25% penalty reduction upon fulfilling the required conditions. The impugned order was modified accordingly, and the appeal was disposed of in light of the above decisions.