2013 (2) TMI 442 - AT - Central Excise

Denial of CENVAT Credit on Capital goods Acquisition of capital goods was made prior to registration - Rule 6 (4) of Cenvat Credit Rules, 2004 Held that - Following the decision in case of PROGRESSIVE SYSTEMS (2011 (2) TMI 477 - KARNATAKA HIGH COURT) When there is no dispute of acquisition of capital goods and use thereof not being found otherwise, there shall not be denial of cenvat credit because those goods were acquired before registration. In favour assessee

Summary

Issues:
1. Denial of cenvat credit on the ground of acquisition made prior to registration.
2. Availment of cenvat credit in two spells.
3. Factual aspect in the show cause notice.

Analysis:
1. The judgment addresses the issue of denial of cenvat credit based on the timing of acquisition in relation to registration. The appellant acquired capital goods before registration but used them in manufacturing after registration. The Tribunal emphasized that the law aims to grant benefits upon acquisition, subject to fulfilling Rule 6(4) of the Cenvat Credit Rules, 2004. Citing a relevant case law, the Tribunal highlighted that utilization of cenvat credit is permissible in subsequent years if not utilized in the year of acquisition. Therefore, the denial of credit based solely on the timing of acquisition before registration was deemed erroneous. The Tribunal allowed the appeal, emphasizing the importance of the actual use of capital goods in manufacturing post-registration.

2. The judgment also mentions that the cenvat credit was availed in two spells, a fact that was not disputed by the Revenue. This acknowledgment further supported the argument that the denial of credit based on the timing of acquisition was unwarranted. The Tribunal's decision considered the uncontroverted nature of the credit availed in two spells, indicating a consistent pattern of compliance by the appellant.

3. Additionally, the judgment notes that there was no disagreement regarding the factual aspect outlined in para 2 of the show cause notice. This observation suggests that both parties were aligned on the essential details related to the acquisition of capital goods and the subsequent utilization of cenvat credit. The absence of factual dispute further reinforced the Tribunal's decision to allow the appeal, emphasizing the importance of actual utilization over the timing of acquisition in determining cenvat credit eligibility.

In conclusion, the judgment provides a comprehensive analysis of the issues surrounding the denial of cenvat credit based on the timing of acquisition in relation to registration. By emphasizing the actual use of capital goods in manufacturing post-registration and considering the uncontroverted nature of the credit availed in two spells, the Tribunal ruled in favor of the appellant, highlighting the fundamental principle of granting benefits upon acquisition subject to compliance with the relevant rules.