The New Delhi Customs, Excise & Service Tax Appellate Tribunal has directed the revenue to refund the penalty imposed for unutilized Cenvat Credit u/s 142(2) and (6) of the Central GST Act.
The appellant, M/s Scot Innovations Wires & Cables Pvt. Limited is engaged in the manufacture of power control cables under Chapter Heading 8544 1190. The appellant vide letter dated 23.06.2015 requested to transfer the unutilised credit of Rs.48,29,318/- as they want to close the Delhi unit & merge with its Baddi unit. The appellant had deposited the 43 purchase bills pertaining to which the cenvat credit was taken and the transfer was sought. Show cause notice was issued on 20.09.2016 for disallowing taking of credit of Rs. 48,29,318/- and a penalty was also proposed.
The appellant submitted that the Baddi Unit was registered with the Department on 05.05.2015 and had not taken cenvat credit as they were availing Area Based Exemption during the period prior to 05.05.2015. It is also submitted that the input credit was taken by the Delhi Unit and the material was transferred to the Baddi Unit for job work and the cenvat credit was availed as the principal manufacturer. It was also submitted that no stock was available with the appellant at Delhi the goods were cleared under exemption vide Notification No.12/2012-CE. Appellant had shown the said credit and clearance of goods in the ER-1 return. Appellant filed a reply to the show cause notice dated 26.10.2017 requesting alternatively for a refund of the unutilized credit of Rs. 48,29,318/-.
The cenvat credit demand was confirmed whereby the adjudicating authority had also rejected the request for transferring credit of Rs.48,29,318/-, disallowed the amount of cenvat credit, and imposed the penalty of Rs. 48,29,318/- under Rule 15 of CenvatCredit Rules, 2004. Aggrieved by the order, the appellant filed an appeal before the appellate authority.
The appellant submitted that it has manufactured dutiable finished goods, which have been cleared without payment of duty under exemption Notification No. 12/2012-CE to Mega Power Project awarded to a developer ‘Larson & Toubro’ through tariff-based competitive bidding. Accordingly, in view of Rule 6(6)(vii), the provision of sub-rule (1), (2), (3), and (4) of Rule 6 are not applicable in the case of the appellant. Hence, the appellant has rightly taken cenvat credit.
The Coram of Sri Anil Choudhary, Member (Judicial) has held that “the appellant has rightly taken cenvat credit and the same is lying in their books un-utilized as on 30.06.2017 when the provisions of CGST Act (GST regime) was implemented with effect from 01.07.2017, and thus if the appellant has not taken the un-utilized cenvat credit to the GST regime by filing form TRAN-1, they are eligible to refund of the un-utilized credit in terms of the transitional provision under Section 142(2) and (6) of the CGST Act”. It was further held that “admittedly, in the facts of the present case, the appellant has not taken the benefit of transactional provision for transfer of unutilized cenvat credit to the GST regime. In this view of the matter, I hold that the appellant is entitled to refund of the un–utilised cenvat credit of Rs. 48,29,318/-. I further direct the Adjudicating Authority to disburse the amount of Rs. 48,29,318/- with interest as per rules within a period of 60 days from the date of receipt/service of a copy of this order”.
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