2025 (2) TMI 620 - AT - Central Excise

CENVAT Credit - inputs and capital goods - admissibility of credit prior to the introduction of CGST Act on 01.07.2017 - HELD THAT - With the introduction of CGST Act the Excise Act ceased to apply to majority of the manufacturers including the respondent. A provision has been made under the CGST Act to transition the Cenvat credit available in records as ITC under the CGST. The respondent had transitioned Cenvat credit of Rs. 4, 64, 70, 985/- as input tax credit under the CGST. There is also a provision for taking input tax credit of duty paid on the goods received in the months of April May June 2017. In other words all the credit which was lying in balance in the books of accounts as Cenvat credit or Cenvat credit which the respondent could have availed but for the introduction of CGST Act could be transitioned ITC under CGST. There is no dispute that the entire disputed Cenvat credit was admissible to the respondent as it is not the case of the Revenue that the credit was not admissible. The only case of the Revenue is that excise duty paid on input and capital goods received after 01.07.2017 could have been availed as input tax credit by entering in Table 7 (b) of TRAN-1 but the respondent wrongly took it as Cenvat credit in its excise return ER-1 for the month of June and then transitioned it by entering in Table 5 (a) of TRAN-1. Apart from this allegation that it was entered in its excise returns of the respondent for June 2017 and was entered in Table 5 (a) of the TRAN-1 instead of Table 7(b) it is not the case of the department that the respondent was not entitled to Cenvat credit and convert it into input tax credit. Conclusion - The disputed Cenvat credit was admissible to the respondent and the procedural lapse did not warrant the recovery of the credit interest or penalties. The impugned order is upheld and the appeal is dismissed.

Summary

The appeal before the Appellate Tribunal concerned the dispute over the admissibility of Cenvat credit on inputs and capital goods by the respondent under the Central Goods and Services Tax (CGST) Act, 2017. The Revenue challenged the order-in-appeal that upheld the decision of the Additional Commissioner, rejecting the appeal filed by the department. The respondent, M/s Synergy Steels Ltd., through a Cross-Objection, sought the dismissal of the appeal.The core legal question revolved around whether the respondent correctly availed Cenvat credit on capital goods received after the introduction of the CGST Act on 01.07.2017. The officers of the CGST Audit Commissionerate observed discrepancies in the availing and utilization of Cenvat credit, leading to the issuance of a show cause notice proposing the recovery of Cenvat credit, interest, and penalties.The Additional Commissioner, after examining the respondent's reply and conducting a personal hearing, found that the respondent was entitled to the Cenvat credit and had not utilized the allegedly wrongly availed credit. The Additional Commissioner concluded that there was a procedural lapse on the part of the respondent but dropped the proceedings as the respondent had carried forward Cenvat credit in excess of the disputed amount.The Commissioner (Appeals) concurred with the Additional Commissioner's decision, holding that the respondent was eligible for the Cenvat credit and dismissing the demand for recovery, interest, or penalties. The Revenue appealed, arguing that the Cenvat credit availed by the respondent was wrongly taken and should not be allowed.The Tribunal analyzed the transitional provisions under the CGST Act and Rules, emphasizing that the disputed Cenvat credit was admissible to the respondent. The Tribunal noted that the Revenue did not dispute the admissibility of the credit but alleged a procedural error in its availing. The Tribunal found that the respondent had correctly transitioned the Cenvat credit under the CGST Act, and the Revenue's contention was based on the manner in which the credit was taken in the excise return ER-1.Ultimately, the Tribunal upheld the impugned order, dismissing the appeal filed by the Revenue and the Cross-Objection by the respondent. The Tribunal concluded that the disputed Cenvat credit was admissible to the respondent, and the procedural lapse did not warrant the recovery of the credit, interest, or penalties.In summary, the Tribunal's decision centered on the correct interpretation and application of the transitional provisions of the CGST Act regarding the availing of Cenvat credit on inputs and capital goods by the respondent. The Tribunal found in favor of the respondent, affirming their entitlement to the disputed Cenvat credit and dismissing the Revenue's appeal.