Tribunal Overturns Cenvat Credit Reversal for Rs. 1.71 Crore; Procedural Lapse Not Grounds for Denial

Sri Vasavi Industries Versus Commr. of CGST & Central Excise, Bolpur

Sri Vasavi Industries Versus Commr. of CGST & Central Excise, Bolpur - TMI Issues involved:
The issues involved in the judgment are the denial of Cenvat Credit by the Adjudicating Authority based on the failure to follow the Input Service Distributor (ISD) procedure for passing of the credit when invoices were issued in the name of the Head Office.

Summary:

Issue 1: Denial of Cenvat Credit based on ISD Procedure:
The Appellant was issued a Show Cause Notice seeking reversal of Cenvat Credit amounting to Rs. 2,06,06,882. The Adjudicating Authority confirmed a duty of Rs. 1,71,91,723 along with interest and penalty due to the Appellant's alleged failure to follow the ISD procedure for passing the Cenvat Credit when invoices were issued in the name of the Head Office.

Analysis:
- The Appellant initially faced allegations of producing only photocopies for the Cenvat Credit, but later provided all original copies during the adjudication process.
- The Adjudicating Authority confirmed the demand primarily on the grounds of not following the ISD procedure for passing the credit when invoices were in the name of the Head Office.
- The Appellant contended that as they only had one unit, the Cenvat Credit could not have been taken in different units when the vendor issued the invoice in the name of the head office.
- The Tribunal observed that there were no disputes regarding the goods on which the Cenvat Credit was taken and the utilization within the factory.
- Referring to a decision by the Gujarat High Court and a CBIC Circular, it was highlighted that denial of Cenvat Credit solely based on non-registration of ISD is a procedural irregularity and cannot be a ground for denial when all necessary records are maintained.

Decision:
- The Tribunal, following previous decisions and legal principles, held that the Appellant's Cenvat Credit cannot be denied based on procedural infractions.
- As the credit was deemed admissible, the Tribunal set aside the confirmed demand, stating that the question of demanding interest and imposing penalties does not arise.
- The impugned order was deemed unsustainable, and the Tribunal allowed the Appeal with consequential relief, if any, as per the law.

Conclusion:
The judgment focused on the denial of Cenvat Credit due to the Appellant's alleged failure to follow the ISD procedure, emphasizing that procedural irregularities should not lead to the denial of substantial benefits when all necessary records are maintained.