Ms Ford India Private Limited vs LTU CHENNAI

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III

Excise Appeal No. 41610 of 2017
(Arising out of Order-in-Original No. LTUC/246/2017-C dated
17.04.2017 passed by Commissioner, Large Taxpayer Unit, 1775,
Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension,
Chennai 600 101.)

1. M/s. Ford India Private Limited
S.P. Koil Post,
Kancheepuram District 603 204.

2. M/s. Ford India Private Limited,
Survey No.1, Village North Kotapur,
Post Sanand, Ahmadabad
….Appellants

VERSUS

The Commissioner of GST & Central Excise,
Chennai Outer Commissionerate,
Newry Towers, No.2054, I Block, II Avenue,
th
12 Main Road, Anna Nagar,
Chennai 600 040
…Respondent


APPEARANCE :
Shri Raghavan Ramabadran, Advocate for the Appellant
Shri M. Selvakumar, Authorized Representative
for the Respondent

CORAM :
HON’BLE MR. P. DINESHA, MEMBER (JUDICIAL)
HON’BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL)

FINAL ORDER No. 41145/2026

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DATE OF HEARING : 04.08.2026
DATE OF DECISION :29.10.2026

Per: Shri P. Dinesha

This Appeal is filed by M/s. Ford India Private
Limited, Chennai (FIPL, Chennai) hereinafter referred to
as the Appellant. Brief undisputed facts as could be
gathered from the impugned Order-in-Original
LTUC/246/2017-C dated 17.04.2017 are that the
Appellant is a manufacturer of passenger cars at their
factory at S.P Koil Post, Kancheepuram District, they were
also having another registered manufacturing plant at
Survey No.1, Village North Kotapur Post Sanand,
Ahmadabad (hereinafter referred to as M/s. FIPL,
Sanand). The Chennai factory was set up in 1999 and
Sanand Factory started its commercial production in June
2015, both the units were availing CENVAT credit for the
inputs, capital goods and input services used by them
under the CENVAT Credit Rules, 2004 and it is also a fact
borne on record that M/s. FIPL, Sanand was transferring
the CENVAT credits availed by it to Chennai unit in terms
of Rule 12A of CCR, 2004. The Appellant being a Large
Taxpayer Unit, the provisions of Rule 12A were applicable

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and in terms of sub-Rule (4) to Rule 12A which enabled a
Large Taxpayer to transfer the CENVAT credit to their
other registered premises by making suitable entry
regarding such transfer and on issuing a transfer challan;
the recipient factory of the Large Taxpayer could take
CENVAT credit on the basis of such challan and utilize for
payment of Excise Duty. Accordingly, the Sanand factory
appears to have issued challan for transfer of credit to
Chennai factory as the Sanand factory was under
construction.

2. During the course of verification of CENVAT credit
availment of the Appellant, it appears that the Revenue
noticed that on some occasions M/s. FIPL, Sanand had
availed CENVAT credit on certain capital goods without
having received the same within their factory. It is also a
fact on record that during the material period CENVAT
credit was taken in Books of Accounts on fortnightly basis
or at the end of the month at Sanand Factory, during the
relevant period CENVAT Credit was taken on 7600 tax
paid documents for total of Rs. 178,86,72,625/- at
Sanand factory. The scope of the present lis as confined
to 4 Bills of Entry, which are captured in the table at

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para 5 of the impugned order, reproduced below for
convenience:

Sl.
of the
CENVAT
Register

Date of
taking
Cenvat
Credit
Bill of Entry
No.
Bill of Entry
date
Supplier’s
information
Gate/
Material
Inward
Ledger
No.&
Date of
receipt
2728 10.07.2014 310
01.07.2014 THYSSENKRUPP
SYSTEM
ENGINEERING
GMBH
6624/
11-07-2014

2729 10.07.2014 6096647
14.07.2014 HYUNDAI
ROTEM
COMPANY

6709/
19-07-2014

2730 10.07.2014 6117399

15.07.2014 JBL SYSTEMS 6708/
19-07-2014
2731 10.07.2014 6070117 09.07.2014 KARL STRZ GMBH &
CO, KG.,
6726/
17-07-2014

3. It is the case of Revenue that since in respect of the
above 4 Bills of Entry the Appellant had wrongly taken the
cenvat credit as the goods were received later. Show
Cause Notice dated 30.06.2016 was issued on the
allegations that the cenvat credit taken by Sanand factory
on capital goods imported vide 4 Bills of Entry without
receipt of capital goods, transfer of impugned cenvat
credit on capital goods to Chennai factory was in violation

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of Rule 12A as amended vide Notification No.21/2014-
CE(NT) dated 11.07.2014, the Sanand factory had taken
100% cenvat credit on capital goods in the same financial
year, the Sanand factory transferred cenvat credit of
Rs.31,86,40,000/- to Chennai factory on 21.08.2014
which included the disputed cenvat credit of
Rs. 3,03,86,410/-, as at the time of transfer of credit,
Sanand factory had not commenced its commercial
production. Hence, the restriction brought out in
Rule 12A (4) stood violated wilfully and the Chennai
factory did not take necessary steps to ensure the
eligibility of credit before taking the impugned credits.

4. In its reply to the SCN, the Appellant appears to have
explained inter alia that the demand of Rs.3,03,86,410/-
would amount to recovering twice i.e., both from Sanand
factory as well as the Chennai factory; Chennai factory
had huge credit balance, that transferred credit from
Sanand factory was not required for immediate usage at
their Chennai factory and the Chennai factory had
reversed the above cenvat credit vide CENVAT credit
register Sl. No.3542 dated 29.05.2015 which was duly
brought to the notice of the Department vide their letter

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dated 09.06.2015. The Original Authority however, vide
impugned Order-in-Original ( supra ) confirmed the
demand of Rs.3,03,86,410/- against both the Chennai
factory and Sanand factory on the grounds that the
burden of proof that the credit was taken in terms of CCR
has not been discharged, the Appellant is a Large
Taxpayer Unit, the Sanand factory had taken CENVAT
Credit worth Rs.623.14 lakhs on 10.07.2014 to
circumvent the amendment to Rule 12A (s upra ) and the
amount has not been demanded twice as the credit has
only been denied for Sanand factory, while the amount
was demanded from Chennai factory. Aggrieved by the
above, the present Appeal has been filed before this
forum.

5. We have heard Shri Raghavan Ramabadran,
Ld. Advocate for the Appellant and Shri M. SelvaKumar,
Ld. Departmental Representative defended the impugned
order. After hearing both sides, we find that the only
issue to be decided is, ‘whether the present demand
confirmed in the impugned order is in accordance with
law?’

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6.1 We have heard the rival contentions and perused
the documents placed on record carefully and also judicial
pronouncements relied upon during hearing; we find that
it is not disputed by the Revenue that during the relevant
period the Appellant’s Sanand factory was under
construction. Further, it is also an undisputed fact Sanand
unit had transferred capital goods on which it had taken
100% credit to its Chennai unit, though the Appellant has
all along pleaded that the above happened due to
unintended mistake, without any mala fide reasons, due
to oversight by the staff and lack of qualified staff, but the
Commissioner has not accepted the same. However, the
fact remains that the Chennai unit had reversed the
cenvat credit much before the issuance of SCN.

6.2 We also find from the record that neither Sanand
unit nor Chennai unit had taken credit of the disputed
amount and the Chennai unit had even reversed the
transfer credit since the Department intimated about the
ineligibility of the same. Even after such reversal Sanand
unit admittedly did not take credit of the same though,
the said unit was eligible for the cenvat credit. Thus, we

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find that the total denial of cenvat credit by the Sanand
unit is not in accordance with law.

7. It is also an undenied fact that upon commencement
of production activity, Sanand unit was eligible to avail the
cenvat credit and hence, at the most, it may amount to
availment of cenvat credit prematurely i.e. prior to the
receipt of the capital goods.

8. The above holds good in respect of the 4 Bills of Entry
th
and in respect of the 5 Bill of Entry the case of the
Revenue is that 100% of credit pertaining to the capital
goods was prematurely availed in the first year instead of
50%.

9. In the case of Commissioner of Service Tax,
Chennai Vs Ad2Pro Global Creative Solutions Pvt.
Ltd. [2023 (5) TMI 1131 – CESTAT Chennai] this Bench
had an occasion to consider the decide the allegation of
premature availment of cenvat credit and after detailed
analysis, this Bench concluded that it was only a
procedural lapse and substantive right cannot be taken
away when there is no dispute as to the eligibility of

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cenvat credit of service tax paid and when conditions like
payment of tax and receipt of services have been found to
satisfied. We find that similar views have been expressed
in India Cement Ltd. Vs CCE, Customs & Service Tax,
Tirupati [2018 (5) TMI 603-CESTAT Hyderabad] and
Emerson Innovation Center, Pune Vs CCE Pune
[2016 (6) TMI 1299-CESTAT Mumbai].

10. With regard to the denial of cenvat credit on the
ground that 100% credit could not have been availed in
the same year of receipt, we find that this issue has also
been addressed to by the Hon’ble Bombay High Court in
the case of Commissioner of Central Excise, Pune Vs
Satish Industries [2012 (9) TMI 383-Bombay High
Court = 2013 (298) ELT 188 (Bom.)] and the Hon’ble
High Court has held at para-3 as under:
“3. On perusal of the order passed by the
Commissioner (Appeals) as also CESTAT, it is seen
that the said authorities have not upheld the action of
the assessee in availing 100% of the credit in the initial
year but have held that by the time the appeal was
heard the initial financial year being over in addition to
the 50% credit of the initial year, the assessee became
entitled to the remaining 50% of the credit available in
the following financial year and thus the assessee was
entitled to 100% credit on the date of the appellate
order. It is not the case of the Revenue that the credit
wrongly availed by the assessee has been utilized in
the initial financial year. If the credit of the subsequent
financial year wrongfully taken in the initial financial

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year if not utilized till the commencement of the
subsequent financial year, then no prejudice is caused
to the Revenue and the decision of the Tribunal
deserves acceptance.”

11. We find from the impugned order that it is not the
case of the Revenue that the Appellant was ineligible to
avail the cenvat credit on the capital goods even
subsequently, since at paragraph 10 of the impugned
order, the Commissioner himself admits that ‘…… Though
the taxpayer is eligible for the balance credit in the
subsequent financial years ….’. The above fact coupled
with the decision of the Hon’ble Bombay High Court
( supra ) makes it clear that the denial of credit in the
hands of Sanand unit cannot sustain.

12. We find that the appellant has raised an additional
ground to support the above view but however, as we
have held that the denial of cenvat credit and the demand
of the same confirmed in the impugned order cannot
sustain, the other grounds would only be academic in
nature.

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13. In view of the above discussion, we are of the view
that the impugned order cannot sustain, for which reason
the same stands set aside and the Appeal is allowed with
consequential benefits, if any, as per law.



(Order pronounced in open court on 29.10.2026)



sd/- sd/-
(M. AJIT KUMAR) (P. DINESHA)
Member (Technical) Member (Judicial)

bhavani