2007 (7) TMI 506 - AT - Central Excise

Summary

Issues:
- Availing Cenvat credit on capital goods
- Timing of availing credit in the same financial year
- Interpretation of Rule 4 of Cenvat Credit Rules, 2002

Analysis:
The case involved the appellant availing 50% Cenvat credit on capital goods during the period 2003-2004 as per sub-rule 2(a) of Rule 4 of the Cenvat Credit Rules, 2002. The appellant sold/transferred the capital goods in the same financial year, paying the full duty mentioned in the invoices despite availing the credit. Subsequently, on 1-4-2004, they availed 50% of the remaining credit as per sub-rule 2(b) of Rule 4. The Commissioner (Appeals) noted that the appellant availed credit on 1-4-2004, which was in the subsequent financial year, contrary to the first proviso to sub-rule 2(a) of Rule 4, which allowed the appellant to take credit for the whole duty amount if the goods were cleared in the same financial year.

Upon review, the judge found that during the financial year 2003-04, the appellant had indeed availed 50% credit and reversed the full duty as the goods were cleared in the same financial year. The first proviso to sub-rule 2(a) of Rule 4 stipulates that if capital goods are cleared in the same financial year, the Cenvat credit for the whole duty paid on such goods should be allowed. The appellant had the option to take the remaining 50% credit in the same financial year but chose to do so in the subsequent financial year. The judge concluded that there was no justification to deny the 50% credit availed during the subsequent financial year. Consequently, the impugned order was deemed unsustainable and set aside, with the appeal being allowed along with consequential relief. The judgment was dictated and pronounced in open court.