Admissibility of Cenvat Credit on Capital goods transferred from one office to another

PJ/Case Laws/2011-12/1214

Case:-BSNL v/s COMMISSIONER OF C. EX., TRICHY

Citation:-2011(22) S.T.R. 628 (Tri.-Chennai)

Issue:- Admissibility of CENVAT credit on capital goods procured by one office and transferred to another office of the same Concern but former office took registration later to the date of transfer?

Brief Facts: - The capital goods were procured by the Madurai office of appellant and transferred to their Kumbakonam office. Cenvat credit was availed. The credit on capital goods was denied by the Original Authority on the ground that the capital goods were procured by the Madurai office and transferred to Kumbakonam office. Also, credit was denied on the basis that the Madurai office was not registered as a dealer prior to the transfer of said capital goods.

Appellant’s Contention:- Appellant contended that the entire Tamilnadu state is treated as one circle by BSNL and the office at Madurai and Kumbakonam are part of that circle. The Kumbakonam office of BSNL comes under Madurai office of BSNL and therefore the capital goods required for Kumbakonam office was procured by Madurai office and transferred to Kumbalonam office and therefore the credit taken was legal and appropriate.

Respondent’s Contention:- Revenue argued that the Madurai office of BSNL took registration only later on and therefore they were not eligible to transfer credit to Kumbakonam office in respect of goods procured by them prior to the date of registration as a dealer.

Reasoning of judgement: - The Tribunal observed that it was not in dispute that the office of BSNL at Madurai and at Kumbakonam both comes under same circle. It was held that it was a case of procurement by higher formation and supply to the subordinate formation. There was no dispute about the duty paid nature of the capital goods and receipt and use of the capital goods for the authorised purpose and therefore the appellant have validly availed credit. Hence there was no justification for denial of CENVAT credit on the capital goods. It was held further that the transaction between Madurai office and Kumbakonam office of BSNL could not be treated as transaction between two dealers. Impugned order of Commissioner (Appeal) set aside and order of the original Authority restored.

Decision: - Appeal allowed with consequential relief.

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PJ/Case Laws/2011-12/1214

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