Custom, Excise & Service Tax Tribunal
Ms Vamshadhara Paper Mills Ltd vs Commissioner Of Gst&Amp;Cce(Chennai ... on 17 July, 2019
1
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 41658 of 2018
(Arising out of Order-in-Appeal No. 58/2018 (UN)(CO) dated 22.03.2018 passed by
the Commissioner of G.S.T. & Central Excise, Puducherry, 1, Goubert Avenue (Beach
Road), Puducherry - 605 001)
M/s. Vamshadhara Paper Mills Ltd., : Appellant
Karambedu Village, Poovalambedu Post,
Gummidipoondi - 601 212
VERSUS
The Commissioner of G.S.T. & Central Excise, : Respondent
Chennai Outer Commissionerate, Newry Towers, Plot No. 2054, I Block, II Avenue, 12th Main Road, Anna Nagar, Chennai - 600 040 APPEARANCE:
Shri. S. Sivaramakrishnan, Advocate for the Appellant Shri. M. Jagan Babu, Authorized Representative for the Respondent CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) FINAL ORDER NO. 40929 / 2019 DATE OF HEARING: 14.06.2019 DATE OF DECISION: 17.07.2019 By this appeal, the appellant is challenging the interest charged under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 and the levy of penalty under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.2
2. When the matter was called out on the date of hearing, Shri. S. Sivaramakrishnan, Ld. Advocate, appeared for the assessee and Shri. M. Jagan Babu, Ld. AR, appeared for the Revenue. Upon being asked, both of them agreed that this Bench has jurisdiction to decide the appeal as no interpretation of any notification/classification/valuation issue is involved.
3.1 The main contentions of the Ld. Advocate for the appellant are that the appellant had taken CENVAT Credit on certain input services received in relation to procurement of imported inputs/capital goods on the basis of invoices issued in the name of M/s. Vamshadhara Paper Mills Ltd., Srikakulam, who, based on the advice of the Revenue authorities, took registration as Input Service Distributor (ISD) and passed on the impugned credit to the appellant.
3.2 He further submitted that even the assessee expunged the CENVAT Credit based again on the advice of the Audit Officers and subsequently took CENVAT Credit in the month of August 2014 based on the ISD certificate and thereafter filed ER-1 returns, which facts were duly intimated to the Revenue/Range Office. It is therefore the case of the assessee that in view of the above facts, the Revenue ought not to have issued the Show Cause Notice, which is dated 18.04.2016, wherein the Revenue having clearly proposed to appropriate the duty element, the demand lies only in respect of interest and penalty. Thereafter, vide Order-in-Original dated 31.01.2017, the proposed appropriation came to be completed, but however, the demand, in so far as interest and penalty are concerned, was raised.
3.3 Ld. Advocate concludes that the appellant having not met with success in its first appeal before the Commissioner of G.S.T. and Central Excise, Puducherry, who vide impugned Order-in-Appeal No. 58/2018 (UN)(CO) dated 22.03.2018 upheld the order passed by the Adjudicating Authority, has approached this forum.
34. Per contra, Shri. M. Jagan Babu, Ld. AR for the Revenue, supported the findings of the lower authorities.
5. I have considered the rival contentions, gone through the documents placed on record and have also gone through the decisions/orders referred to during the course of arguments.
6.1 I find that the only issue is whether the Revenue authorities are justified in demanding interest and penalty on the facts and circumstances recorded above. It is not in dispute that upon being pointed out during audit in May 2014 and June 2014, the appellant showed its bona fides by expunging the CENVAT Credit, obtaining the ISD registration and only thereafter took the CENVAT Credit in the month of August 2014 and these facts are very much available on record.
6.2 Moreover, it is the settled position of law as of now that as long as availability of CENVAT Credit with the ISD is not questioned and consequently the passing on of the same to one of the branches of the ISD, the same cannot be denied in the hands of the recipient, being a branch or unit. The specific facts, as pleaded by the appellant before the Adjudicating Authority which are recorded at pages 3/4 in paragraph 2.1, clearly show that there was an amalgamation of the appellant with M/s. Vamshadhara Paper Mills Ltd., Srikakulam.
6.3 It is also an equally settled position that as regards the non-obtaining of registration, ISD registration is only a procedural requirement for the purposes of distributing CENVAT Credit and this has been held so in the case of M/s. Laxmi Organic Industries Ltd. Vs. Commissioner of Central Excise, Raigad in Appeal No. E/701/2012 vide Final Order No. A/87027/2017/EB dated 24.04.2017 reported in 2018 ACR 680 CESTAT Mumbai wherein, after following various judicial precedents, it has been concluded that the credit cannot be denied on the ground that the invoice is not in the appellant's name or in the 4 name of the Head Office or that the Head Office is not registered under ISD at the relevant time.
7.1 In view of the above, the availment of CENVAT Credit by the appellant, being a unit/sister unit/branch, cannot be denied and consequently, it cannot be said that the CENVAT Credit had been taken wrongly or utilized wrongly or has been erroneously refunded, to charge interest under Rule 14 of the CENVAT Credit Rules, 2004. This being so, the interest charged cannot sustain and hence, the same is set aside.
7.2 For the same reasons, there cannot be any question of levy of penalty under Rule 15 of the CENVAT Credit Rules, 2004 in terms of Section 11AC of the Central Excise Act, 1944 and hence, the penalty, as levied and confirmed, is set aside.
8. For the above reasons, the impugned order stands set aside, the appeal is allowed and the interest and penalty are ordered to be deleted.
(Order pronounced in the open court on 17.07.2019) (P. DINESHA) MEMBER (JUDICIAL) Sdd