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2018 (5) TMI 657 - AT - Central ExciseCENVAT credit - the capital goods which were received before 10.09.2004 on the invoices prior to that date - interpretation of statute - Held that - there is no dispute as to the fact that the capital goods on which Central Excise duty was paid were received by the appellant prior to 10.09.2004, undisputedly used/installed in the factory premises for manufacture of dutiable excise goods credit was availed in 2007 and 2008. In the case of Coromandel Fertilizers Ltd., 2008 (8) TMI 333 - CESTAT, BANGALORE the Tribunal held for interpretation of the rule which states that credit may be taken immediately, the same cannot be interpreted in a manner to destroy the right created for an availment of CENVAT credit. Credit allowed - appeal dismissed - decided against Revenue.
Issues:
- Entitlement to avail CENVAT credit on capital goods received before 10.09.2004. - Interpretation of CENVAT Credit Rules, 2004. - Application of limitation period for recovery of improper credit. - Validity of documents for availing credit. - Adjudicating Authority's reasoning for dropping proceedings. - Precedents set by previous Tribunal judgments. Entitlement to avail CENVAT credit on capital goods received before 10.09.2004: The appeal revolved around whether the respondent/assessee could avail CENVAT credit on capital goods received before 10.09.2004. The Adjudicating Authority concluded that the credit could be availed, and the proceedings initiated by the show cause notice needed to be dropped based on merit and limitation. The Revenue contended that as per Rule 3(1) of CENVAT Credit Rules, 2004, credit could only be taken on goods received after 10.09.2004. However, the Adjudicating Authority found no legal infirmity in availing credit on capital goods received before the specified date. Interpretation of CENVAT Credit Rules, 2004: The case involved a detailed analysis of Rule 3(1) of the CENVAT Credit Rules, 2004, which allowed credit on goods received after 10.09.2004. The Adjudicating Authority emphasized that there was no restriction in the rule regarding the date of the invoice for availing credit. Additionally, Rule 11 provided a transitional provision for taking credit under the previous rules. The Tribunal upheld the Authority's interpretation, stating that the right to avail CENVAT credit should not be destroyed by a strict interpretation of the rules. Application of limitation period for recovery of improper credit: The Adjudicating Authority considered the extended period of limitation for recovering improper credit. It was noted that the department's allegation was based on Rule 3(1) but found no legal basis for disallowing the credit. The Authority agreed with the assessee that there was no suppression of facts regarding the receipt of capital goods, thus rejecting the department's claim for extended recovery based on limitation. Validity of documents for availing credit: The documents used by the assessee to avail credit were deemed valid under Rule 9 of the CENVAT Credit Rules, 2004. The Authority highlighted that there were no statutory records prescribed for central excise and credit availed, further supporting the validity of the documents presented by the assessee. Adjudicating Authority's reasoning for dropping proceedings: The Adjudicating Authority justified dropping the proceedings initiated by the show cause notice by emphasizing that the assessee was legally entitled to take credit on the capital goods in question. The Authority found no merit in the allegations against the assessee and concluded that the demand failed both on merits and limitation grounds. Precedents set by previous Tribunal judgments: The Tribunal relied on previous judgments, particularly the case of Coromandel Fertilizers Ltd., to support the Adjudicating Authority's findings. The Tribunal agreed with the interpretation of the rules provided in the earlier cases, reinforcing the validity of the assessee's actions in availing CENVAT credit on capital goods received before 10.09.2004. Consequently, the Tribunal upheld the impugned order, rejecting the appeal.
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