2018 (8) TMI 417 - AT - Central Excise

Time limitation for availing CENVAT Credit - Held that - During the relevant period as per the provision of Rule 4(1), it was merely provided that the Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs in the factory. However, there is no time limit prescribed for taking the credit. If we draw the interpretation of the term may be taken immediately , it is a facility provided to the assessee that he needs not to wait for use of the material and removal of the finished goods on payment of duty for taking the credit, therefore, the intention of this provision is that after receipt of the inputs even though it is lying in the factory, not used in the manufacture of final product and final product was not cleared on payment of duty, the credit can be taken immediately on receipt of the inputs. There is no bar provided in the Cenvat Credit Rules that within how much period credit should be taken. The Ld. Counsel invited out attention to the goods receipt note which bears the detail of transport such as Lorry Receipt number etc. Since these records were not before the Adjudicating Authority, he did not verify regarding receipt of the inputs. Ld. Commissioner gravely erred for the reason that if at all he wanted to see the LRs, he could have called for from the appellant which he failed to do so. Accordingly, Ld. Commissioner has grossly violated the principles of natural justice. Moreover, outcome of the verification report was not brought to the notice of the appellant. If this exercise would have been done by the Ld. Commissioner, the case could have been finally decided. Since the additional records such as LRs were produced before this tribunal and not before the Adjudicating authority, to this extent, the matter needs to be remanded. Appeal allowed by way of remand.

Summary

Issues:
1. Availment of Cenvat Credit on imported materials.
2. Discrepancies in maintaining Cenvat register.
3. Allegation of belatedly availing Cenvat Credit.
4. Violation of principles of natural justice.
5. Time-barred demand for Cenvat Credit.
6. Suppression of facts by the appellant.

Analysis:
1. The appellant was engaged in manufacturing various products falling under different chapters of the Central Excise Tariff Act, 1985, availing Cenvat Credit on inputs, capital goods, and input services. The issue arose when discrepancies were found in the Cenvat register during an audit, showing belated availing of credit on Customs duty, additional duty, and education cess debited in various duty credit scrips. The department issued a Show Cause Notice (SCN) for disallowance of the credit, citing it as time-barred due to the delay in availing the credit.

2. The appellant argued that the delay in availing credit was unintentional, citing a previous Circular as the reason for not taking credit earlier. The appellant contended that there was no specific timeline prescribed for availing credit under the Cenvat Credit Rules, 2004. The appellant also raised concerns about the adjudication being based on a verification report not provided to them, alleging a violation of principles of natural justice.

3. The Tribunal analyzed the limitation for availing Cenvat Credit during the relevant period and noted that there was no specific time limit prescribed until a later amendment. The Tribunal held that the credit cannot be disallowed solely based on belated availing, especially when there was no time limit in place earlier. The Tribunal emphasized the importance of establishing the receipt of inputs for cases where credit was belatedly taken for the first time. The Tribunal found errors in the adjudicating authority's failure to verify the Lorry Receipts, leading to a violation of natural justice.

4. The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh denovo order, considering the observations made. The issue of limitation was also kept open for further consideration. The Tribunal highlighted the need for proper verification and consideration of all relevant documents to ensure a just decision.

In conclusion, the judgment addressed the issues of belatedly availing Cenvat Credit, discrepancies in maintaining records, violation of natural justice, and the time-barred demand for credit. The Tribunal emphasized the importance of following principles of natural justice, proper verification of documents, and considering all relevant factors before making a decision in such cases.