TaxTMI 
TaxTMI 
2026 (9) TMI 891
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....34,58,942/- on input services used for setting up the factory and prior to commencement of commercial production; (ii) Cenvat Credit of Rs. 8,40,735/- on certain common/fixed expense services relating, inter alia, the roads, street lights, drainage etc; (iii) Cenvat Credit of Rs. 14,55,256/- on goods such as stainless steel stools, buckets, containers, drum racks, HDGI cable tray ladders, fire extinguishers, glass fittings etc; (iv) Duty of Rs. 2,66,731/- on the allegation of short payment on clearances to a related unit by non-adoption of 110% of CAS-4 value; and (v) Recovery of Rs. 6,48,171/- representing the portion which, according to the Department, remained unappropriated out of total credit of Rs. 15,01,222/- reversed by the appellant. 4. The appellant has also challenged the demand of interest, imposition of penalties and invocation of the extended period of limitation. 5. We have heard both the sides and perused the records with written submissions. 6. Since different issues arise for determination, it would be appropriate to deal with them separately. Cenvat Credit on services used in setting up the factory - Rs. 2,34,58,942....
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....pt of each service. Accordingly, the demand of Rs. 2,34,58,942/- under this head is set aside. Credit of fixed/common expenses - Rs. 8,40,735/-: 13. The next issue concerns common services such as maintenance of roads, street lights, rain water drainage and allied infrastructure for which charges were recovered on an acreage basis. Credit was denied principally because these facilities were situated outside the registered factory premises. 14. The appellant contends that these facilities are essential for ingress and egress of raw materials and finished goods and for continuous operation of this manufacturing unit. We find that location of the facility outside the physical boundary of the factory cannot, by itself, be determinative of admissibility of input service credit. The test remains whether the service has a nexus, direct or indirect with manufacture or the manufacturing business. Maintenance of approach/common roads, drainage, lighting and similar infrastructure facilitating operation of an industrial premises cannot be treated as wholly unrelated to manufacturing activity merely because the infrastructure is common or situated beyond the factory gate. The appellan....
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....hin any specific exclusion from Rule 2(k). 19. Consequentially, the denial of credit solely for want of direct use in production cannot be sustained. The demand of Rs. 14,55,256/- is accordingly set aside. Differential duty of clearances to related unit - Rs. 2,66,731/-: 20. The next issue concerns non-adoption of 110% of CAS-4 value for certain clearances to the appellant's related unit. The appellant does not seriously dispute the underlying valuation requirement but submits that the differential liability had already been discharged through a supplementary invoice dated 29.03.2019. According to the impugned order, the supplementary invoice could not be accepted principally because of reference to an incorrect provision of Section 142 of the CGST Act, discrepancy in quantity and charging of IGST. 21. We find that this aspect requires examination in the light of the transitional provisions. Section 142(2)(a) of the CGST Act specifically contemplates issuance of supplementary invoice or debit note where the price of goods supplied prior to the appointed day is revised upwards after the appointed day. 22. CBIC Circular No. 76/50/2018-GST dated 31.12.2018 also clarifie....
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.... amount cannot again be demanded merely because part of the reversal produced a negative figure in the return. However, the necessary reconciliation between the pre-GST Cenvat records, TRAN-1, GSTR-3B and electronic credit ledger is essentially factual. 27. We therefore, remand this limited issue also to the Adjudicating Authority for verification. The appellant shall be given credit for the entire amount of Rs. 15,01,222/- to the extent the reversal/payment is established from the statutory records. There shall be no duplication of recovery. Interest on credit reversed: 28. The appellant further contends that interest has been demanded even on the credit which had been availed but never utilised. Rule 14(1)(ii) of the Cenvat Credit Rules, as applicable during the relevant period, provided for recovery of interest in cases where Cenvat Credit had been wrongly taken and utilised. Consequently, if the disputed credit was merely taken but remained unutilised until its reversal, interest cannot demanded for such period. This aspect shall also be verified by the Adjudicating Authority in respect of the admitted credits forming part of Rs. 15,01,222/-. Interest, if any shall the....