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2018 (9) TMI 19 - AT - Central ExciseCENVAT Credit - adjustment of credit prior to 01.09.2014 - taking credit after 6 months from the date of invoice - insertion of 6th proviso in the Rule 4 of Cenvat Credit Rules 2004 - assessee sought breathing period since there was limitation prior to insertion of such proviso - Held that - The insertion of the proviso is limited to its application and no explanation even by way of clarificatory orders by the department is found in respect of application of the Rule to the invoices raised prior to the amendment date or about adjustment of such credit in so called breathing period of nearly one month and three weeks during which period, situation might not have arisen to avail such credit since production is influenced by lot of factors including rainy season, labour problem etc. - The clarificatory order issued by the CBEC Board vide Circular no. 990/14/2014-CX-8 dated 19.11.2014 which has been referred in the show-cause notice is unrelated to the issue in hand since it has exempted the period of limitation in three contingencies if within six months credit was taken for the first time and subsequently reversed. In the case in hand, since appellant had availed the credits on 30.09.2014 in the same month on which the appended proviso to the Rule came into force, it is entitled to avail and adjust the same against the final product of his manufacturing unit. Appeal allowed - decided in favor of appellant.
Issues: Denial of cenvat credit under Rule 4 of Cenvat Credit Rules 2004 for invoices raised before amendment date.
Analysis: 1. The case involves challenging the denial of cenvat credit amounting to ?16,84,841/- on a single day on 30.09.2014 against invoices raised between 05.09.2010 and 22.08.2013, after the insertion of the 6th proviso in Rule 4 of Cenvat Credit Rules 2004 on 01.09.2014 disallowing credit after 6 months from the date of issue of specified documents. The denial was upheld by the Commissioner (Appeals-I), leading to the appeal. 2. The appellant had been availing cenvat credit of capital goods and input services without any restrictions before 01.09.2014. However, the amendment introduced a time limit for availing such credit. The appellant took credit against past invoices on 30.09.2014, which was later questioned by the assessing officer, leading to a duty demand, interest, and penalty. The appellant argued that the notification should only apply to invoices raised after the amendment date and that there was no malafide intent in availing the credit against past invoices. 3. During the appeal, the appellant cited judicial precedents to support their argument that the notification should have prospective effect and that credit cannot be denied on goods received against duty-paying documents before the issuance of such notification. The appellant emphasized that the credit was utilized immediately after the notification due to contingencies related to discharging central excise duty, urging leniency in considering their case. 4. The department argued that the amended proviso was effective from 01.09.2014, giving a breathing period of one month and two weeks for adjusting credit against previous documents, which the appellant did not utilize. Citing relevant decisions, the department supported the order passed by the Commissioner (Appeals) denying further benefits to the appellant. 5. After hearing both sides and reviewing the case records, the Tribunal observed that the proviso's application was limited, with no clarification from the department regarding its application to invoices raised before the amendment date. The Tribunal noted that a circular exempting the period of limitation under certain conditions was unrelated to the issue at hand. Relying on judicial precedents, the Tribunal concluded that the notification should apply to invoices raised after the amendment date and that the appellant, having availed the credit in the same month the proviso came into force, was entitled to adjust the credit against their final product. Consequently, the appeal was allowed, setting aside the order of the Commissioner (Appeals). 6. The Tribunal pronounced the decision on 14.08.2018, allowing the appeal and overturning the order of the Commissioner (Appeals) dated 16.01.2018.
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