2018 (6) TMI 786 - AT - Central Excise

CENVAT credit - inputs - Revenue entertained a view that inasmuch as goods were not received in the factory on or after first day of March 2001, the appellant would not be entitled to avail the credit of the same, in terms of the new provisions of Rule 57AB introduced vide N/N. 6/2001-CE(NT) - Held that - When the inputs were received in the assessee s factory in Jan. and Feb. 2001, they were admittedly entitled to avail the credit of duty paid thereon. Had they taken the credit in Jan. and Feb, itself, there would have been no objection by the Revenue. In fact, the said inputs were duly entered by them in their input records and it was only taking of credit which was deferred. As such, it can be seen that it is a case where the appellant had earned the credit and has become entitled to the same and only making entries in RG-23A Part-II were delayed/left. As such, it is a case of correction of records and has no bearing on the appellant s entitlement to take credit. The amended provisions talks about taking of credit in respect of inputs received on or after 1.3.2001 inasmuch as National Calamity Contingent Duty was imposed for the first time with effect from 1.3.2001 and in respect of inputs received prior to the said dates, no credit of such duty would have been available to the assessee. The assessee cannot be denied the credit in respect of inputs received by him prior to 1.3.2001, especially when he was within his rights to avail the credit in respect of said inputs and could have availed the same immediately on receipt of the goods prior to 1.3.2001 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Rule 57AB regarding the availment of Cenvat credit on duty paid inputs received before and after the amendment.
2. Denial of credit by Revenue based on the timing of receipt of inputs and applicability of the amended provisions.
3. Applicability of Circular No. 76/76/94-CX in clarifying the issue of availment of credit for inputs received before the introduction of National Calamity Contingent Duty.

Analysis:
The case involved a dispute regarding the availment of Cenvat credit on duty paid inputs by a manufacturer of motor vehicles. The appellant received certain inputs in Jan. and Feb. 2001 but availed the credit in March 2001 due to the amendment in Rule 57AB, which allowed the credit for National Calamity Contingent Duty paid on inputs received after 1.3.2001. The Revenue contended that since the inputs were received before 1.3.2001, the appellant was not entitled to credit under the amended provisions (Para 2).

The Tribunal noted that the appellant was entitled to avail the credit on inputs received in Jan. and Feb. 2001, and the delayed entry of credit did not affect their entitlement. The amendments in Rule 57AB were interpreted to allow credit for inputs received before 1.3.2001 if the assessee was within their rights to avail the credit immediately upon receipt. The Tribunal found no merit in the Revenue's argument and set aside the denial of credit, allowing the appeal (Para 4, 6).

Furthermore, the Tribunal referred to Circular No. 76/76/94-CX, which clarified similar issues in the past regarding the availment of credit for inputs received before the introduction of new duties. The circular emphasized that an assessee who earned credit for inputs before the new provisions would still be entitled to avail the credit under the amended rules. This clarification supported the Tribunal's interpretation of the provisions in the present case (Para 5).

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the delayed entry of credit for inputs received before the amendment did not impact their entitlement to avail the credit. The decision highlighted the importance of a logical interpretation of the rules to ensure that rightful credits are not denied based on procedural delays (Para 6).