Excise, VAT & CST Case Laws, CENVAT Rulings & Updates

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Facts –

The Appellant, M/s. Morganite Crucible (India) Ltd., is engaged in manufacturing of excisable goods viz. Silicon Carbide Crucibles, Clay Graphite Crucibles and spout cement etc. at their factory at Walgunj, Aurangabad.
They started manufacturing a new product Die Lube at their another unit at different premises with separate Central Excise registration for this product. They had availed Cenvat credit of common services had availed Cenvat credit of common services.
It was appearing to department that common input services shall be distributed to all units pro rata on the basis of turnover of such units, and the appellant has wrongly availed to the extent of turnover of their Die Lube Unit in violation of Rule 7 ibid.
Accordingly after invoking the extended period a demand cum show cause notice dated 27.2.2017 was issued to the appellant which culminated into disallowing the credit taken and recovery of the amount along with interest and penalty.

Issue –

Whether the Appellant is entitled to the Cenvat Credit attributable to common input service utilized in its Die Lube Unit?

Order –

The Tribunal observed that Hon’ble High Court of Judicature at Bombay in the matter of The Commr. Central Tax, Pune-I Commissionerate vs. M/s. Oerlikon Balzers Coating India P. Ltd.; held that the assessee was entitled to utilize the Cenvat credit at its one unit only i.e. Pune unit. The Hon’ble High Court also gone into the issue of revenue neutrality in that matter.
The entire excise would be revenue neutral as the utilization by any unit of the same entity would not make any loss to the exchequer as the credit disallowed from one unit in proportion to second unit will be eligible as credit to such other unit and the net credit availment and utilization form a company’s perspective will remain unchanged and also that the appellant is not going to gain anything extra to its entitlement.
In such a scenario there is no question of any suppression on the part of the appellant and therefore extended period is also not invokable in the facts of the case and on this count also the demand fails.
The appeal is allowed.

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