By TIOL News Service

AHMEDABAD, MAR 31, 2016: THESE appeals were heard pursuant to the remand ordered by the Gujarat High Court 2015-TIOL-1555-HC-AHM-CX.

The appellant is engaged in the manufacture of Partially Oriented Polyester Yarn (POY) through its three different divisions/factories/units, namely PFY Division (the appellant), DT Division & Vareli Unit/Division. PFY Division and DT Division are located at Jolwa and have a common boundary wall within the same premises. The Vareli unit is located at a distance of about 4.5 km from Jolwa.

The Company requested the Dy. Commr.,CExto issue a common Registration Certificate for merging their PFY Division and DT division and by an order the Dy. Commr. allotted a new R.C.

Later, the Company filed a fresh application on 14.7.2004 for including their Vareli unit for a single common R.C. for all their three units on the ground of having common management. By letter/order, dated 28.7.2004 the Deputy Commissioner allowed a common R.C. to the assessee for all the three units and the other R.Cs. were cancelled. The Deputy Commissioner also allowed maintenance of a single consolidated PLA/Cenvat Account for all three units.

Subsequently, by a letter/order dated 24.1.2005 the DC withdrew the facility of maintenance of single consolidated PLA/Cenvat credit account. An appeal came to be filed before the Commissioner (Appeals).

By another letter dtd 28.2.2005, appellant again requested the DC for separate registration for all their three units, as they wanted to avail the benefit of Notification No 30/2004-CE, dtd 9.7.2004.

This request was rejected and another appeal was filed.

Similarly, by another order dated 21.08.2005, the Commissioner (Appeals) decided earlier appeal filed by the appellant against the Order dtd 24.1.2005 and remanded the matter to the Adjudicating Authority to pass order after considering the earlier OIA dtd 12.4.2005.

Aggrieved, Revenue filed an appeal against OIA dtd 12.4.2005 but the same was dismissed by the Tribunal and which order was upheld by the High Court & the Supreme Court.

Incidentally, after the order of the Gujarat High Court on 23.9.2009, separate R.Cs. were issued to the DT unit and Vareli Unit. Thereafter, the Assessee started to maintain records of PLA/Cenvat account separately as per R.C. issued.

Prior to 23.9.2009 the Assessee was paying duty on the basis of single R.C. as provided to the Assessee and availed Cenvat Credit. According to the Revenue, since 15.4.2005, as the Assessee applied for separate R.C. for the three units, it would be considered that these units are separate three units as on 15.4.2005. Hence, the transfer of cenvat credit from DT unit to the Assessee and utilisation by the Assessee is irregular.

Accordingly, SCNswere issued proposing demand of cenvat credit related to transfer of cenvat credit from DT unit to the Assessee unit during the period from 15th April, 2005 to 22nd Sept. 2009 and another SCN was issued for non-reversal of cenvat credit by the Assessee on input, semi-finished goods and finished goods lying at two units viz., DT unit and Vareli unit at the time of considering these three units as separate units as on 15.4.2005.

The Adjudicating Authority confirmed the total demandof Rs.30,19,18,590/- and imposed penalty on the Assessee and the authorized signatory.

Both the noticees are before the CESTAT.

After considering the elaborate submissions made by both sides, the Bench observed -

+ It is clear that maintenance of separate PLA/Cenvat Account would arise only after implementation of the earlier Order (Appeal) dated 12.4.2005 to issue separate R.Cs. for three units.

+ Commissioner (Appeal) rightly held that after issuance of separate R.C. for three units, they would maintain separate PLA/Cenvat account and prior to that only one PLA/cenvat account would be maintained by the Assessee for discharging duties for clearance of goods.

+ The Order dated 12.4.2005 of Commissioner (Appeal) was implemented on 23.9.2009, when the other two R.Cs. were issued to DT Division and Vareli Division as quoted above. On close reading of the above R.Cs., it is clear that the said R.Cs. dt.23.09.2009 were issued as per application dt.28.02.2005. So, the finding of the Adjudicating authority that the Assessee applied for separate R.Cs. on 28.02.2005 and 15.04.2005 and from 15.04.2005, it would be considered as separate units, are contrary to R.Cs. dt.23.09.2009.

+ We agree with the submission that prior to 23.9.2009, three units cannot be considered as separate and different. The entire findings of the Adjudicating Authority is that on 15.04.2005, the three units would be considered as separate and the Assessee should follow Rule 10 of Rules, 2004 for transfer of credit. There is no need to discuss this issue, as it is observed that on 23.09.2009, three units would be considered as separate units.

+ The Assessee cannot discontinue the maintenance of common PLA/Cenvat Account on its own, unless three separate R.Cs. are issued as ordered by the Commissioner (Appeals). So, the findings of the Adjudicating Authority that as the Assessee applied for separate registration on 15.4.2005 and from that date three Divisions would be considered separately registered as three separate factories, is against the provisions of the law and facts of the case.

+ The expressions "separate registration certificate shall be obtained for each of such premises" in Para 2 of Notification No. 35/2001-CE (NT) dtd 26.6.2001 as amended indicate that the registration certificate shall be obtained by the Assessee. By order dated 12.4.2005, the Commissioner (Appeals) directed that the three factories should be issued separate registration by Deputy Commissioner. Further, by Order dtd 31.8.2005, the Commissioner (Appeals) observed, if the earlier OIA is implemented (ie., the separate registration for the three units), consequently requiring the maintenance of separate PLA/Cenvat Account. So, unless the Deputy Commissioner would issue the separate registration for the three units as per direction of the Commissioner (Appeals), it cannot be considered as separate units.

+ It is observed that unless the Assessee obtains a separate registration certificate from the Department, they cannot maintain separate records. They cannot file separate returns for the Assessee and the DT division. Hence, the Assessee rightly maintained a consolidated Cenvat Account/PLA for the purpose of discharging duties for clearance of the excisable goods from their factory on the basis of singe registration certificate during the material period. It is revealed from the R.Cs. dated 23.09.2009 as quoted above that as per application dated 28.02.2005 the Deputy Commissioner issued R.Cs. on 23.09.2009. Hence, the Assessee should not be punished for delay of issuing R.Cs., which is against all cannons of natural justice and fair play.

+ As per CCR, 2004 there is no one-to-one co-relation between the inputs and final product. The Assessee was holding a single registration certificate during the material period and they have rightly discharged duty liability for clearance of the goods for home consumption by utilising credit from Cenvat Account on inter-unit transfer of credit from DT Division to the Assessee, by a common pool. In any event, substantial benefit of the Assessee of utilisation of Cenvat Credit by a common pool cannot be denied by a technical infraction of provision of law, if any.

Holding that the assessee had rightly utilized the Cenvat Credit transferred by DT units for clearance of the goods for home consumption during the period April 2005 to Sept. 2009 as the Assessee was holding single registration certificate during the said material period, the order was set aside and all the appeals were allowed.

(See 2016-TIOL-760-CESTAT-AHM)