2025-VIL-1831-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Availment of CENVAT credit by manufacturing units based on the ISD invoices, Rule 14 of CENVAT Credit Rules, 2004, Rule 6 of CENVAT Credit Rules, 2004 - The head office of the appellant is registered with the Service Tax department as an ISD and distributes the CENVAT credit amongst the manufacturing units - Show cause proceedings against the appellant, proposing recovery of CENVAT credit availed by the manufacturing units based on the ISD invoices issued by the head office, on the ground that the service tax paid on the input services was not properly available for credit since the appellant was engaged in trading activities - Whether the CENVAT credit availed by the manufacturing units based on the ISD invoices issued by the head office is proper – HELD - Since the manufacturing units had correctly availed the CENVAT credit and utilized the same for clearance of the finished products, and did not engage in the trading activities, the embargo created in Rule 6 of the CCR, 2004 for maintenance of separate records or for payment of requisite percentage of amount shall not be applicable. The department had not specifically alleged regarding irregular availment or utilization of CENVAT credit by the manufacturing units, and therefore, the provisions of Rule 14 cannot be invoked for confirmation of the demands on the appellants - Since the appellants had maintained adequate records, based on which the statutory ST-3/ER-1 returns were filed before the jurisdictional authorities, it cannot be alleged that the appellants had involved in the activities, concerning fraud, collusion, willful misstatement etc., with intent to evade payment of the required dues. Therefore, the extended period of limitation cannot be invoked for recovery of the demands - The impugned order is set aside and the appeal is allowed
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