2018 (9) TMI 1778 - AT - Central Excise

CENVAT Credit - stock lying in their factory - Bills of Entries which are more than six months old - Held that - An identical issue was dealt by the Tribunal in the case of M/s Sanwariya Tiles Pvt. Ltd. others Vs. CEC CGST, Jodhpur 2018 (6) TMI 783 - CESTAT NEW DELHI , where it was held that By adopting the principles of harmonious construction and interpretation of rule, the appellant right to avail the credit at the time of coming out of the exemption scheme cannot be curtailed down by adopting Rule 4(1) of the Cenvat Credit Rules - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:

1. Availing Cenvat credit on import of marble slabs after crossing small scale exemption limit.
2. Entitlement to Cenvat credit on stock older than six months based on Bills of Entries.
3. Interpretation of Rule 4(1) of the Cenvat Credit Rules regarding the availment period.

Analysis:

1. The appellant was importing marble slabs and initially availed small scale exemption benefit. Upon surpassing the exemption limit in February 2015, they began availing Cenvat credit amounting to ?42,108 for the stock in their factory.

2. The Revenue contended that the appellant could not avail Cenvat credit for Bills of Entries older than six months, leading to proceedings against them. However, a similar issue was addressed by the Tribunal in a previous case, where it was established that the appellant's right to avail credit upon exiting the exemption scheme should not be hindered by the six-month limitation of Rule 4(1) of the Cenvat Credit Rules.

3. The Tribunal's decision emphasized that Rule 3(2) of the Cenvat Credit Rules allows for credit of inputs in stock upon crossing the exemption limit, irrespective of the age of Bills of Entries. It was clarified that Rule 4(1) should not render Rule 3(2) ineffective, and a harmonious interpretation of both rules is essential to uphold the substantive rights of the assessee. Therefore, the appellant's right to avail credit upon exiting the exemption scheme cannot be restricted by the provisions of Rule 4(1).

4. Consequently, following the precedent set by the Tribunal in the referenced case, the impugned orders were set aside, and the appeal was allowed with consequential relief, affirming the appellant's entitlement to Cenvat credit in accordance with Rule 3(2) of the Cenvat Credit Rules.

This detailed analysis of the judgment highlights the issues surrounding the appellant's entitlement to Cenvat credit and the interpretation of relevant provisions under the Cenvat Credit Rules, providing a comprehensive understanding of the Tribunal's decision.