Appellant wins in dispute over Cenvat credit denial and excise duty demand for new unit.

The appellant, engaged in cement manufacturing, faced challenges regarding the denial of Cenvat credit for setting up a new unit, Mangalam Grinding Unit (MGU), and the demand for excise duty on clinker clearance. The Tribunal ruled in favor of the appellant, noting that the denial of credit for MGU was unjustified due to common registration and timing of credit availed. Additionally, the denial of credit on input services post-amendment and for inputs used in power supply to MGU was deemed unfounded. The demand for duty on clinker clearance was set aside, emphasizing industry practices and legality governing Cenvat credit and duty demands post-unit registration.

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Issues:
1. Denial of Cenvat credit availed by the appellant for setting up a new unit.
2. Demand of Central Excise duty on clinker clearance from the original unit to the new unit without payment.
3. Denial of Cenvat credit on input services and capital goods prior to common registration.
4. Interpretation of the term "input services" post-amendment.
5. Denial of Cenvat credit on inputs used in power supply to the new unit.

Analysis:
The appellant, engaged in cement manufacturing, set up a new unit, Mangalam Grinding Unit (MGU), near the original unit. Initially, the department challenged the common registration of both units, but the Tribunal and High Court upheld the common registration. The dispute arose when a Show Cause Notice proposed denying Cenvat credit of about Rs. 13.73 Crore for setting up MGU and demanded excise duty on clinker clearance. The appellant challenged the denial of credit mainly on the grounds of common registration, timing of credit availed, and interpretation of input services post-amendment.

The Tribunal noted that the appellant had procured capital goods and input services for MGU before its formal registration, which is a common industry practice. The denial of credit based on the timing of registration was deemed incorrect as the units were under the same management and premises. The Tribunal cited a similar case where the High Court allowed credit adjustment post-merger of separate units, supporting the appellant's position. Therefore, denial of credit for setting up MGU was unjustified.

Regarding the denial of Cenvat credit on input services post-amendment, the Tribunal found that the adjudicating authority exceeded the scope of the Show Cause Notice by not providing specific findings on the affected input services. Without detailed findings, the denial of credit on input services was deemed unjustified. Similarly, the denial of credit for inputs used in power supply to MGU was unfounded as the units were considered a single factory post-registration, warranting credit approval.

Lastly, the demand for duty on clinker clearance was set aside since the units, with common registration, were entitled to captive consumption benefits. The Tribunal overturned the impugned order and allowed the appeal in favor of the appellant, emphasizing the legality and industry practices governing Cenvat credit and duty demands post-unit registration.

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