2007 (7) TMI 116 - AT - Central Excise

Cenvat/Modvat - Appellants availed the credit in respect of input received from July, 2001 to March, 2003 in the month of July 2003 but Commissioner(A) allowed the credit in respectto only six months from the date of inputs received and rejected others - Tribunal upheld the decision of commissioner(A)

Summary

Issues:
Challenge to the inadmissibility of Cenvat credit amount availed by the appellant.

Analysis:
The appellant, engaged in manufacturing, availed Cenvat credit for Ammonia received between July 2001 and March 2003 in July 2003. The Revenue alleged suppression of facts and issued a show cause notice in 2004, claiming the credit was wrongly taken. The adjudicating authority disallowed a portion of the credit amount, citing Rule 4(1) of Cenvat Credit Rules, 2002, requiring immediate credit upon input receipt. The authority allowed credit for inputs received six months before the credit date, disallowing the rest.

The Commissioner (Appeals) upheld the decision, interpreting "immediately on receipt" as requiring prompt credit upon input receipt. Referring to a Circular, it was noted that credit need not be immediate, but no specific time limit was mentioned. Relying on a Supreme Court decision, a reasonable time for credit was deemed six months. The Commissioner found the authority's extension to six months justifiable based on rule changes logic.

The appellant contended that Rule 57AC allowed credit even after six months, challenging the six-month limit set by the Commissioner. The Department argued that extending the period beyond immediate receipt would render the rule redundant.

The Tribunal analyzed the rule position during the relevant period, noting the shift from a six-month limit to immediate credit upon input receipt under Rule 57AC. The Tribunal emphasized the requirement for immediate credit under Rule 4(1) without a specific time frame but with the expectation of promptness. The Tribunal dismissed the appeal, stating the appellant was not entitled to the disallowed Cenvat credit amount.

In conclusion, the Tribunal upheld the decision disallowing a portion of the Cenvat credit amount, emphasizing the requirement for immediate credit upon input receipt without a specified time frame but with the expectation of promptness. The appeal challenging the inadmissibility of the credit amount was dismissed.