Order Date – 27 February 2023

Parties: M/s. India Cements Limited and its units Vs Commissioner of Central Tax, Tirupati-GST

Facts –

• The Appellant, M/s. India Cements Limited, and all its units/the appellants herein are engaged in the manufacture of cement and clinker. They are availing Cenvat credit of excise duty paid on the inputs, service tax paid on input services used in relation to the manufacture of cement and clinker and also of excise duty paid on capital goods.
• Show cause notices were served upon the appellants alleging that during the period August 2012 to December 2015 the credit availed on quantity based distribution is in violation of amended Rule 7 of Cenvat Credit Rules, 2004 (CCR, 2004) and the respective amount was proposed to be recovered from the appellants.
• The appellant has submitted that three of the show cause notices have been issued invoking the extended period of limitation.

Issue –

• Whether the credit availed on quantity basis by the appellants are irregular?

Order –

• The Tribunal held that the appellant was availing and utilizing such amount of Cenvat credit as was distributed by their ISD. They otherwise were regularly mentioning the availment/utilized amount in their ER returns. In light of these findings, the department was not entitled to invoke the extended period of limitation.
• The Tribunal relied on the decision of Hon’ble High Court Gujarat in the case of Commissioner of Central Excise Vs. Dashion Ltd. reported in 2016 (41) S.T.R. 884 (Guj.) wherein it is held that when the invoices for input services are not disputed by the Revenue, the availment of Cenvat credit by the unit of an ISD Distributor cannot be denied on the ground that the service was availed by some other unit, it being merely a procedural deficiency.
• The procedural irregularities are held to be ignored when there is no apparent loss to the revenue nor any apparent benefit to the assessee.
• It was found that there is no proposal to issue any show cause notice to the said ISD for alleged wrong distribution of the credit. This situation has been dealt with by this Tribunal in the case of M/s. Indsil Energy Electro Chemicals. 
• Hence the demand for the periods are not sustainable.