2013 (3) TMI 1 - AT - Central Excise

Cenvat credit denied - credit has not been taken immediately on receipt of the inputs in the factory - Held that - The Tribunal in the case of Pierlite India Pvt. Ltd. vs. CCE, Ahmedabad (2009 (9) TMI 115 - CESTAT, AHMEDABAD) and in the case of Lubi Electronics (2009 (1) TMI 605 - CESTAT, AHMEDABAD) held that no time limit for taking credit is provided in the CENVAT Credit rules. Similarly, the Tribunal in the case of SGS India Pvt. Ltd. (2011 (3) TMI 759 - CESTAT, MUMBAI), after relying upon the Board s Circular dated 29.08.2000, held that if the manufacturer has not taken credit immediately on receipt of the goods, the manufacturer cannot be deprived of taking of the credit. Thus the impugned orders whereby the credit was denied on the ground that the same has not been taken immediately on receipt of the inputs are not sustainable hence set aside and consequential penalties are also set aside - in favour of assessee.

Summary

Issues involved:
- Denial of CENVAT credit on the ground of delay in taking credit immediately upon receipt of inputs.

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai involved a common issue where two appeals were taken up together. The appellant had filed two appeals, one confirming a demand of Rs.4,45,65,219/- and the other confirming a demand of Rs.33,00,548/- while denying the credit and imposing penalties. The appellants were engaged in manufacturing excisable goods and availing CENVAT credit of duty paid on inputs. The dispute arose as the credit was denied due to not being taken immediately upon receipt of inputs as per Rule 4(1) of the CENVAT Credit Rules, 2004.

The appellants argued that the term "immediately" in Rule 4(1) does not mean credit must be taken as soon as inputs are received, but rather at the earliest point after receipt. They cited Circular no. 345/2/2000-TRU and previous Tribunal decisions to support their contention that delayed credit should not debar them from availing it later. The Revenue, however, relied on the rule's literal interpretation to justify denying the credit, stating that the delay hinders verification of input usage in manufacturing goods.

The Tribunal analyzed Rule 4(1) and previous decisions, including Transformers & Rectifiers, Essar Steel Ltd., Pierlite India Pvt. Ltd., and Lubi Electronics, to interpret the rule's provisions. It held that the manufacturer can take credit upon input receipt without immediate action, and a delay should not lead to credit denial. The Tribunal found the denial of credit based on delayed action unsustainable and set aside the impugned orders and penalties. The appellants were directed to demonstrate the receipt and use of duty-paid inputs in manufacturing goods cleared with duty payment. The appeals and cross-objection were disposed of accordingly, with the judgment pronounced on 20/11/2012.