2018 (10) TMI 1762 - AT - Central Excise

CENVAT credit - taking of belated credit - While receiving the duty paid goods in the factory, the appellant did not avail the CENVAT Credit of the duty amount indicated in the invoices immediately and had availed such credit after a lapse of 1 years from the date of receipt of duty paid goods in the factory - Rule 4 (1) of Cenvat Credit Rules, 2004 read with Rule 16 of the Central Excise Rules, 2002 - HELD THAT - Rule 16 of the Central Excise Rules, 2002 permits a manufacturer to take CENVAT Credit of Central Excise duty paid on the goods, which are received in the factory for the purpose of remade, refined, reconditioning or for any other reason. Further, Rule 4 of the Cenvat Credit Rules, 2004 provides that the CENVAT Credit in respect of inputs may be taken immediately on receipt of the inputs in the factory by the manufacturer. In this case, the fact is not in dispute that the duty paid goods initially removed from the factory were received back for the purpose of carrying out some process and after completion of such process/activities; the same were removed from the factory on payment of Central Excise duty. Thus, under the provisions of Rule 16 of the Rules, the appellant was entitled to take CENVAT Credit of Central Excise duty paid on excisable goods, which were subsequently returned back to the factory. On examination of the provisions between the C.P.C. vis- -vis, Cenvat statute, it transpires that the later provisions were designed in such manner that the authorities should take liberal view in extending the benefit of credit, appreciating the overall facts and circumstances of the case and the statutory provisions cannot be strictly applied for denying the benefit of legitimate claim of the Cenvat amount. Due to reasonable cause, the appellant did not avail the credit immediately on receipt of the goods, for which the substantive right conferred in the Cenvat statute cannot be denied. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Delayed availment of CENVAT Credit on returned duty paid goods.

Analysis:
1. The appeal challenged an order by the Commissioner (Appeals), Central Excise, Mumbai, regarding the denial of CENVAT Credit to the appellant for delayed availment of credit on duty paid goods returned to the factory premises.

2. The appellant, engaged in manufacturing excisable goods, received duty paid goods back under Rule 16 of the Central Excise Rules, 2002 for repair/reconditioning, and cleared them after completion of the process. The department disputed the delayed credit availed by the appellant, citing Rule 4(1) of Cenvat Credit Rules, 2004 and Rule 16 of Central Excise Rules, 2002 as requiring immediate credit on receipt of goods.

3. The appellant argued that as per Cenvat statute, they were permitted to avail CENVAT credit on duty paid goods, even with delayed credit uptake. They referenced tribunal decisions and CBEC's Excise Manual to support their stance on the delayed credit availment being permissible under the law.

4. The Revenue contended that the phrase "immediately" in the statute should be strictly interpreted, citing judicial precedents to support the denial of credit due to the appellant's delayed action. They emphasized that the delay in availing credit was unjustified and warranted the denial of benefits.

5. Upon review, the Tribunal noted that Rule 16 allowed manufacturers to take CENVAT Credit on goods returned for specific purposes like repair. The Tribunal highlighted that while Rule 4 mentioned "may be taken immediately," the term "may" indicated a flexible interpretation rather than a strict requirement for immediate action.

6. The Tribunal referenced the Excise Manual and tribunal precedent to support the view that delayed credit uptake, without a specific time limit, should not result in denial of benefits. It distinguished the cited judicial precedents, emphasizing the difference in statutory interpretation requirements between the Criminal Procedure Code and the Cenvat statute.

7. Ultimately, the Tribunal found no merit in the impugned order, allowing the appeal in favor of the appellant. The decision emphasized the need for a liberal view in extending credit benefits under the Cenvat statute, considering the circumstances and substantive rights of the appellant.

Judgment:
The Tribunal set aside the Commissioner's order, ruling in favor of the appellant regarding the delayed availment of CENVAT Credit on returned duty paid goods, highlighting the flexibility in interpreting the statutory provisions and the need for a liberal approach in granting credit benefits.