By TIOL News Service

ALLAHABAD, AUGUST 16, 2014 : THIS is a classic case of how jittery can Revenue be.

The assessee is engaged in the manufacturing of Sugar, Molasses and its bye-product Rectified Spirit and Denatured Spirit.

On 29.01.2001, the assessee applied for single registration to cover both the units namely Distillery and Sugar Unit.

The Superintendent of Central Excise ‘visited' the premises of the assessee and after necessary ‘verification' granted single registration vide letter dated 16.03.2001. Sensing something a miss, by another letter dated 23.03.2001, he withdrew the approval granted.

Since their appeal was dismissed the assessee knocked the doors of the Tribunal.

Vide an order dated 25.01.2002, the Tribunal set-aside the orders passed by the lower authorities and directed the department to issue a single registration to the assessee in respect of both the units.

Being aggrieved, the department took the matter to the High Court and following was the reference made –

(a) Whether the amalgamation of two units (manufacturing distinct products) and in turn utilization of accumulated modvat credit of one unit for clearance of final product of another unit can be allowed under Rule 57AF of Central Excise Rules, 1944, when there are practically two separate premises for Central Excise purposes, which requires separate registration under Rule 174(3) of Central Excise Rules, 1944.

(b) Whether modvat credit earned on such inputs, which are not used in or in relation to the manufacture of a final product as required under Rule 57AA of Central Excise Rules, 1944 can be utilized.

So, the whole point is that the department fears cross utilization of the MODVAT credit.

The matter was heard by the High Court recently.

And this is what the High Court observed after reproducing Rule 174(3) of the erstwhile CER, 1944 -

“Rule-174..............

Rule-174(3):- If there are more than one premises requiring registration he shall obtain separate registration certificate for each of the premises.”

++ In the instant case, the Tribunal observed that both the units of the assessee are working in the same factory premises as per the approved revised plan. Both the units have been allotted a common PAN by the Income-tax Department for the purpose of joint assessment. Similarly, both the units filed the trade tax returns in the common name of M/s. Shravasti Kisan Sahkari Chini Mills Ltd. The management and staff are common for both the units.

++ The Rule-174(3) is applicable where there are more than one premises, meaning thereby different premises. In the instant case, the premises is common, so the said rule is not applicable. So the assessee is entitled for common registration.

Noting that the second question mentioned in the statement is consequential, the High Court held that the order passed by the Tribunal is sustainable and accordingly dismissed the reference made by the Revenue.

(See 2014-TIOL-1377-HC-ALL-CX )