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of <h1>Appeal success: Denial of credit for transferring duty paid inputs overturned. Validity of registration under Factories Act confirmed.</h1> <h3>KESARWANI ZARDA BHANDAR Versus COMMISSIONER OF C. EX., ALLAHABAD</h3> The Tribunal allowed the appeal, setting aside the penalty and confirming that the denial of credit for transferring duty paid inputs between units was ... Cenvat/Modvat Issues Involved: Appeal against disallowance of credit and imposition of penalty u/s Central Excise Rules.Summary:The appellants, engaged in manufacturing Branded Chewing Tobacco in two units, appealed against disallowance of credit of Rs. 50,000/- and imposition of a penalty of Rs. 1,000. The dispute arose from the transfer of duty paid inputs between units for manufacturing intermediate products. A show cause notice was issued regarding denial of credit for glycerin transferred between units. The adjudicating authority dropped the proceedings, but on appeal, the demand was confirmed by the Commissioner (Appeals).The appellant contended that they are registered under the Factories Act as one factory with two manufacturing units for branded chewing tobacco. They argued that the denial of credit by considering both units as manufacturing units was incorrect. They claimed that if credit was reversed in the first unit, it should be allowed in the second unit where the inputs were used for manufacturing intermediate products. The appellant also argued that the demand was time-barred and that they had not suppressed any material facts.The revenue contended that the appellants had transferred inputs between units without following the proper procedure, justifying the demand. However, the Tribunal found that as the appellant was a manufacturer of branded chewing tobacco with two registered units in the same factory, taking credit in the main unit for inputs used in the second unit was permissible. The Tribunal held that the demand was not sustainable as the inputs on which credit was availed were used in the same factory for manufacturing excisable goods. Consequently, the appeal was allowed, and the penalty was set aside.(Order dictated and pronounced in the open Court on 8-2-07)
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