Dispute Over Cenvat Credit Eligibility for Capital Goods Across Multiple Plants: CESTAT Allows Appeal Based on Single Registration [Read Order]

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) allowed the appeal based on single registration in a dispute over cenvat credit eligibility for capital goods transferred between multiple plants.

DTL Ancillaries Pvt. Ltd.,appellant-assessee, manufactured load bodies for Tata LCV vehicles, parts for Indian Railways, Piaggio, Tata Motors, and wagon and AC coach parts. The assessee received a show cause notice on 30.12.2014, stating that it operated three plants in Pune. Plant No.1 had Central Excise registration, while Plants No.2 and No.3 did not.

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The notice alleged that the assessee claimed cenvat credit of Rs.1,38,46,417/- on capital goods brought into Plant No.1. These goods were then moved to Plants No.2 and No.3 for further manufacturing. The notice argued that the assessee was not eligible to claim the credit because only Plant No.1 was registered for Central Excise. It proposed to recover the credit and appropriate Rs.1,24,86,431/- already paid, along with penalties and confiscation of the goods.

The adjudicating authority disallowed the cenvat credit, appropriated the paid amount, and imposed a penalty of Rs.4,75,432/- under Section 11AC of the Central Excise Act, 1944. The appellant appealed the decision before this tribunal.

The assessee's counsel said that Plants No.2 and 3 were part of the same unit as Plant No.1. He explained that an application was made on 08.06.2016 to register all three plants under one Central Excise registration. On 24.06.2016, the Principal Commissioner of Central Excise approved the single registration for all plants under the existing registration number. The counsel argued that this showed the plants were part of the same unit and that the show cause notice was based on wrong assumptions.

He also referred to a ruling by the Madras High Court and submitted a letter from the Assistant Commissioner, Central Excise, confirming the approval for the single registration.

The Authorised Representative(AR) did not comment on the approval given by the Revenue for the single registration from 24.06.2016.

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The two member bench comprising Dr.Suvendu Kumar Pati(Judicial Member) and Anil G.Shakkarwar(Technical Member) reviewed the case and the submissions made. It noted that the Revenue's argument was that capital goods were brought into Plant No.1 (Unit No.1), cenvat credit was claimed, and the goods were later used in Plants No.2 and No.3 (Units No.2 and No.3). The Revenue claimed that, at the time, these units were not part of the Central Excise registered premises, which led to the denial of cenvat credit.

However, the appellate tribunal found that, on 24.06.2016, the Principal Commissioner of Central Excise had approved treating all three plants under the same Central Excise registration. The CESTAT concluded that the units were part of the same manufacturing unit, and there was no issue with the removal of capital goods after claiming cenvat credit.

The tribunal set aside the impugned order and allowed the appeal with relief.

To Read the full text of the Order CLICK HERE

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