2018 (6) TMI 982 - AT - Central Excise

Utilization of CENVAT credit - Credit maintained at another unit - Demand was raised on the ground that as regards the excise duty on the removal of goods from Ambernath factory, the cenvat credit maintained at Andheri corporate office under a common pool cannot be utilized - Held that - There is no dispute on the fact that the common pool of credit was being maintained at the corporate office of the appellant, which includes the credit on input service related to the Ambernath factory also. Therefore, the utilization of the said credit for payment of excise duty on the goods cleared from Ambernath factory cannot be disputed as the credit was belonging to the factory. The correct procedure which could have been adopted by the appellant was that they should have distributed the input service credit to their factory by issuing invoices. In such cases, the factory could have availed the said credit and utilized for payment of excise duty. This is only a procedural lapse. However, there is no wrong utilization of the credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Utilization of cenvat credit for excise duty, Centralized service tax registration, Procedural lapse in credit distribution, Time-barred demand.

Analysis:

1. Utilization of Cenvat Credit for Excise Duty:
The case revolved around the appellant's utilization of cenvat credit for excise duty on goods cleared from their factory. The appellant maintained a common pool of input service credit at their corporate office, which included credit related to the factory. The appellant argued that since both the factory and corporate office belonged to the same company, the credit could be utilized for excise duty payment. The Tribunal agreed, noting that while the correct procedure would have been to distribute the credit to the factory, the utilization at the corporate office did not result in revenue loss. The Chartered Accountant certificate confirmed the attribution of substantial credit to the factory, justifying the utilization for duty payment.

2. Centralized Service Tax Registration:
It was established that the corporate office had a centralized service tax registration, further supporting the appellant's argument regarding the utilization of cenvat credit for excise duty. The Tribunal considered this centralized registration in conjunction with the common pool of credit maintained at the corporate office to validate the appellant's position on the credit utilization.

3. Procedural Lapse in Credit Distribution:
The Tribunal acknowledged a procedural lapse on the part of the appellant in not distributing the input service credit to the factory through invoices. However, this lapse did not invalidate the credit utilization for excise duty payment. The Tribunal emphasized that despite the procedural error, there was no incorrect utilization of credit, and the government did not suffer any revenue loss due to the appellant's actions.

4. Time-Barred Demand:
The appellant contended that the demand was time-barred as all necessary information had been provided through monthly returns to the jurisdictional officers. While the judgment did not explicitly address this issue, the Tribunal's decision to set aside the impugned order and allow the appeal implied that the time-barred aspect did not impact the final decision.

In conclusion, the Tribunal ruled in favor of the appellant, overturning the demand for excise duty payment and emphasizing that the utilization of cenvat credit at the corporate office for duty payment related to the factory was justified. The judgment highlighted the importance of considering the overall attribution of credit and the absence of revenue loss in determining the validity of credit utilization.