2024 (8) TMI 958 - AT - Central Excise

Transfer of CENVAT Credit - shifting of unit situated in Chrompet to another of their unit in Appur village during the period from July 2007 to November 2007 - the department informed the appellant that the credit taken beyond October 2007 is not eligible for transfer as the unit at Chrompet had stopped production and was merged with Appur unit - HELD THAT - Under the CENVAT scheme there is no one to one correlation between the inputs and the final product. During the impugned period there was no time limit during which credit had to be taken on duty paid documents. In the absence of any allegation of fraud or that the documents on which the credit was availed was not proper or that the inputs were not at all used for the manufacture of the final product, the credit cannot be denied. Procedural issues like the ER1 returns being belatedly filed etc. should not come in the way of substantial justice, when the law does not bar such a relief. Justice V.R. Krishna Iyer speaking for a Division Bench in State of Punjab Anr. Vs. Shamlal Murari Anr. 1975 (10) TMI 105 - SUPREME COURT had held ' We must always remember that processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. It has been wisely observed that procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.' In facts of the case as discussed, the impugned order approving the rejection of appellants request for transfer of credit as per letter of the Assistant Commissioner, Chrompet Division, is set aside and the appellants prayer allowed - appeal disposed off.

Summary

Issues: Transfer of CENVAT credit from one manufacturing unit to another, denial of credit for service tax, procedural issues regarding time limits for availing credit.

Analysis:

The appeal was filed against an Order in Appeal passed by the Commissioner of Central Excise (Appeals) regarding the transfer of CENVAT credit from one unit to another. The appellant, a manufacturer of steel forgings, shifted their manufacturing unit and requested the transfer of unutilized credit to the new unit. The authorities permitted the transfer of some credit but denied a portion of it, citing service tax credits taken after the closure of operations at the old unit. The Appellate Authority rejected the appeal, leading to the current appeal.

The appellant's consultant argued that the denial of credit for service tax was incorrect as it also included credit for capital goods received during a specific period. They contended that there was no statutory time limit for availing CENVAT credit and cited judgments supporting their position. The consultant emphasized that the denial of credit based on the timing of credit availed was unjustified and referred to previous rulings to support their argument.

The Authorized Representative for the respondent reiterated the points made in the impugned order and requested that the order be upheld. However, the Tribunal, after considering the arguments from both parties, found that under the CENVAT scheme, there was no specific time limit for availing credit on duty paid documents. In the absence of fraud or misuse of documents, the credit could not be denied based on procedural issues like delayed filing of returns. The Tribunal cited a legal observation emphasizing that procedural laws should aid justice, not obstruct it.

Ultimately, the Tribunal set aside the impugned order that rejected the transfer of credit and allowed the appellant's request, stating that the denial of credit was not justified. The appellant was deemed eligible for consequential relief as per the law, and the appeal was disposed of accordingly.