2018 (12) TMI 1236 - AT - Central Excise

CENVAT Credit - duty paying invoices - invoices issued beyond the six months from the date of invoice - sub-rule (1) of rule 9 of the CENVAT Credit Rules - Held that - What is required is that that the appellant has to take credit within six months and the fact that they have taken credit within six months only gets reflected in their ER-1 returns. Otherwise, the department has no way of knowing whether they have taken credit within six months - credit has to be taken within a period of six months and the fact that they have taken credit has to be reflected in their ER-1 returns. Otherwise, the entire rule has no meaning and the department has no means of verifying whether the credit was taken as per the Rules. Whether the relevant date for effect of the Notification placing the time limit is the date of invoice or the date on which credit has been taken? - Held that - The date of the invoice has to be after 01.09.2014 for limitation of six months to apply - In this case since invoices in question were issued prior to 01.09.2014, credit is admissible on this ground alone. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of the 5th proviso to Rule 4(7) of CENVAT Credit Rules 2004 regarding the time limit for availing CENVAT credit.
2. Whether the credit taken in private records but not reflected in ER-1 returns amounts to non-compliance.
3. Applicability of the amendment requiring credit to be taken within six months from the date of the invoice.
4. Statutory requirements for maintaining records and submission of CENVAT credit details.

Analysis:

Issue 1: The primary contention revolved around the interpretation of the 5th proviso to Rule 4(7) of CENVAT Credit Rules 2004, which stipulates a time limit for availing CENVAT credit. The appellant had taken credit on invoices beyond the six-month period, leading to a show cause notice. The lower authority confirmed the demand, imposing penalties, which was subsequently set aside by the 1st Appellate Authority. The Tribunal held that the credit must be taken within six months, and the failure to reflect it in the ER-1 returns was not acceptable, emphasizing the importance of compliance with the rules.

Issue 2: Another crucial aspect was whether the credit taken in private records but not reflected in the ER-1 returns constituted a violation. The appellant argued that they had maintained ledgers showing timely credit availed, but the department stressed the significance of reflecting such credits in the prescribed returns. The Tribunal sided with the revenue, emphasizing that the credit must be not only taken within the stipulated period but also accurately reflected in the ER-1 returns for verification purposes.

Issue 3: The question of the amendment's applicability, requiring credit to be taken within six months from the date of the invoice, was pivotal. The Tribunal considered precedents and held that for the limitation period to apply, the date of the invoice must be after 01.09.2014. Since the invoices in question were issued before this date, the credit was deemed admissible, leading to the rejection of the appeal.

Issue 4: Lastly, the statutory requirements for maintaining records and submitting CENVAT credit details were discussed. The respondent argued that they had taken credit in private records and partially reflected it in the ER-1 returns, which the 1st Appellate Authority accepted. However, the department contended that the failure to furnish detailed credit information to the Range superintendent constituted suppression. The Tribunal emphasized the importance of adhering to statutory requirements and upheld the department's position regarding the submission of accurate records for verification.

In conclusion, the Tribunal rejected the appeal, emphasizing the necessity of compliance with the CENVAT Credit Rules, particularly regarding the timely availing and proper reflection of credits in the prescribed returns.