2017 (6) TMI 98 - AT - Central Excise

CENVAT credit - registration was granted by the department on 8th May 2001. They started taking Cenvat credit on inputs w.e.f. 4th May 2001 - denial on the ground that credit cannot be allowed without having registered the premises of appellant - Held that - on 3rd May 2001 when the appellant have applied for the registration they deemed to have been registered from 3rd May 2001 accordingly it cannot be said that they have taken modvat credit without being registered - Even if it is assumed that registration has been issued on 8th May 2001 credit cannot be disallowed only on the ground that the appellant was not registered at the time of taking credit for the reason that there is no bar or restriction provided under provision for availing modvat credit in CER 1944 prevailing at the relevant time - appeal allowed - decided in favor of appellant.

Summary

Issues:
Central Excise Registration date discrepancy, Cenvat credit availed before registration, Denial of credit, Interpretation of Central Excise Rules, 1944, Scope of show cause notice, Modvat credit provisions, Relevant case laws.

Central Excise Registration date discrepancy:
The appellant applied for Central Excise Registration on 3rd May, 2001, but the registration was granted by the department on 8th May, 2001. They started taking Cenvat credit on inputs from 4th May, 2001. The show cause notice was issued for denial of credit availed before the issuance of Central Excise registration, stating that credit cannot be allowed without registering the appellant's premises. The adjudicating authority initially dropped the proceedings, but the Revenue appealed, leading to the Commissioner(Appeals) setting aside the Order-in-Original based on Central Excise Rules, 1944.

Cenvat credit availed before registration:
The appellant argued that they applied for registration on 3rd May, 2001, and availed credit accordingly, indicating they did not take credit without registration. They contended that even if credit was taken before obtaining registration, there is no restriction in the modvat provision to limit credit on inputs. The appellant emphasized that the credit was utilized after obtaining the registration certificate, and the Commissioner(Appeals) exceeded the show cause notice's scope by relying on provisions from 1st April, 2000, which were not relevant to the case.

Interpretation of Central Excise Rules, 1944:
The Revenue's stance was that without registration, the appellant could not avail modvat credit as the Central Excise Rules, 1944 contain beneficial provisions for modvat credit, which necessitate registration for compliance. The argument was centered on the procedural requirement of registration before claiming substantial benefits of modvat credit.

Scope of show cause notice:
The Tribunal noted that the Commissioner(Appeals) went beyond the show cause notice's scope and the Order-in-Original by referencing modvat provisions as of 1st April, 2000, while the appellant availed credit from 4th May, 2001 onwards. This discrepancy rendered the Commissioner's findings irrelevant and based on an inapplicable law, ultimately leading to the setting aside of the impugned order.

Modvat credit provisions:
The Tribunal held that the appellant, having applied for registration on 3rd May, 2001, was deemed registered from that date, allowing them to avail modvat credit from 4th May, 2001. The absence of a specific bar or restriction in the Central Excise Rules, 1944 at that time meant that the credit could not be disallowed solely based on the timing of registration issuance. Precedents cited by the appellant's counsel supported this view, emphasizing that procedural lapses should not hinder the substantial benefit of modvat credit.

Relevant case laws:
The Tribunal referenced various judgments, including mPortal India Wireless Solutions Pvt Ltd Vs. Commissioner, Commissioner Vs. Tavant Technologies India Pvt Ltd, Well known Polysters Ltd Vs. Commissioner, and J.R. Herbal Care India Ltd Vs. Commissioner, to support the appellant's position that registration is a procedural requirement and should not impede the entitlement to modvat credit. These cases highlighted the importance of focusing on the substantive benefit of modvat credit over procedural technicalities.

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