2017 (2) TMI 379 - AT - Central Excise

CENVAT credit for the period 2002-03 - denial on the ground that CCR, 2004 came into effect from 10-9-2004 vide N/N. 23/04-CE(N.T.) dated 10-9-2004 - Held that - under CCR, 2004 the assessee is allowed to take credit of service tax paid only on such services which was received by the manufacturer on or after 10-9-2004 - In the present case the services admittedly provider by the provider and received by the appellant before 10-9-2004 therefore in terms of Rule 3(i) of CCR, 2004 credit is not admissible - credit is not admissible even as per transitional provisions under Rule 11 of Cenvat Credit Rules, 2004 - appeal dismissed - decided against assessee.

Summary

Issues:
Availment of Cenvat credit on service tax paid for periods 2002-03 and 2005-06 in April 2007; Disallowance of credit by the department based on Cenvat Credit Rules, 2004; Interpretation of Rule 3(i) and Rule 11 of Cenvat Credit Rules, 2004; Applicability of transitional provisions on credit earned and unutilized before 10-9-2004.

Analysis:
The case involved the appellant availing Cenvat credit on service tax paid for the periods 2002-03 and 2005-06 in April 2007. The department initiated proceedings to disallow this credit, citing the Cenvat Credit Rules, 2004, effective from 10-9-2004. The crux of the issue revolved around whether credit for services provided before 10-9-2004 but with tax paid after that date was admissible under Rule 3(i) of the Cenvat Credit Rules, 2004.

The appellant argued that Rule 3 applied to services received after 10-9-2004, while transitional provisions under Rule 11 allowed credit for amounts earned before 10-9-2004. The appellant relied on a Tribunal order to support their claim. On the other hand, the Revenue contended that Rule 3 clearly restricted credit to services received after 10-9-2004 and that Rule 11 only allowed credit for unutilized amounts earned before 10-9-2004.

Upon careful consideration, the Member (Judicial) analyzed the rules and provisions in detail. It was established that under Rule 3(i) of the Cenvat Credit Rules, 2004, credit was permissible only for services received after 10-9-2004. Additionally, Rule 11 dealt with transitional provisions for credit earned and unutilized before 10-9-2004. In this case, the service tax was paid in April 2007 for services provided before 10-9-2004, rendering it ineligible for credit under both Rule 3 and Rule 11.

The Member (Judicial) referenced specific judgments to support the decision, highlighting that the facts of the present case aligned with those in the cited cases. The judgment emphasized the distinction between the appellant's situation and the case where unutilized credit existed before 10-9-2004. Ultimately, the impugned order disallowing the credit was upheld, and the appeal was dismissed based on the clear provisions of the Cenvat Credit Rules, 2004 and the transitional provisions outlined in Rule 11.

In conclusion, the judgment delivered by the Member (Judicial) on 6/1/2017 emphasized the strict adherence to the rules and transitional provisions governing Cenvat credit, ultimately leading to the dismissal of the appellant's appeal.