2019 (7) TMI 1696 - AT - Central Excise

CENVAT Credit - SAD - whether the Cenvat credit taken by the appellant with respect to SAD on 20-1-2015, by virtue of Bill of Entry dated 22-5-2014, whether the same is not permissible under proviso to Rule 4(1) of Cenvat Credit Rules, which have been introduced vide Notification No. 21/2014-C.E. (N.T.), dated 11-7-2014 w.e.f. 1-9-2014? - HELD THAT - The said proviso have been introduced w.e.f. 1-9-2014 and there is no stipulation in the amending notification that the same shall apply retrospectively. Rules of interpretation provide that whenever any statute is newly added the same has got only prospective effect unless it is specifically provided in the amending statute or the amendment is by way of substitution of an existing provision mainly by way of clarification or removal of defects. Accordingly, the said proviso in Rule 4(1) of Cenvat Credit Rules has got only prospective effect. Thus, the appellant has taken credit rightly on 20-1-2015 on the basis of Bill of Entry dated 22-5-2014 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the Cenvat credit taken by the appellant with respect to SAD on 20-1-2015, based on a Bill of Entry dated 22-5-2014, is permissible under the proviso to Rule 4(1) of Cenvat Credit Rules.

Analysis:

The appellant, a purchaser/importer of marble blocks, availed SSI exemption under Notification No. 8/2003-C.E. (N.T.) during the financial year 2014-15. Prior to the introduction of the 3rd proviso in Rule 4(1) of Cenvat Credit Rules, an assessee could take Cenvat credit upon receipt of relevant documents. However, the 3rd proviso, effective from 1-9-2014, stated that credit cannot be taken after six months from the date of issue of specified documents. The Revenue did not dispute the availability of Cenvat credit, but issued a show cause notice objecting to the credit taken on 20-1-2015 concerning a Bill of Entry dated 22-5-2014. The notice was adjudicated against the appellant, disallowing the credit and imposing penalties. The appellant appealed to the Commissioner (Appeals) and subsequently to the Tribunal.

The main issue in this appeal was whether the 3rd proviso of Rule 4(1) of Cenvat Credit Rules, introduced from 1-9-2014, had retrospective effect. The Tribunal analyzed that the proviso was effective from 1-9-2014 without any retrospective application specified in the amending notification. Following rules of interpretation, the Tribunal determined that new statutes have prospective effect unless expressly stated otherwise or if the amendment clarifies existing provisions. Consequently, the Tribunal held that the proviso had only prospective effect. Therefore, the appellant rightfully took credit on 20-1-2015 based on the Bill of Entry from 22-5-2014. The appeal was allowed, granting the appellant consequential benefits as per the law.

In conclusion, the Tribunal's decision clarified that the 3rd proviso of Rule 4(1) of Cenvat Credit Rules, effective from 1-9-2014, did not have retrospective application. As a result, the appellant was deemed eligible to claim the Cenvat credit taken on 20-1-2015 in accordance with the Bill of Entry dated 22-5-2014.