2006 (7) TMI 115 - HC - Central Excise

Cenvat credit claimed for inputs of goods during 1994-95 in May 2003 - held that no restriction in time limit fixed for taking credit in respect of capital goods - goods were imported in the year 1994-95 and ultimately duty has been finally settled by the Settlement Commission Rule 11 applicable Rule 7 not applicable - - tribunal was justified in holding that no restriction in time limit fixed for taking credit in respect of capital goods credit not time barred

Summary

Issues:
1. Applicability of Rule 7(1)(b) of the Cenvat Credit Rules, 2002 to the respondent for the claim of Cenvat Credit in 2002-03.
2. Time-barred claim of Cenvat credit for inputs of goods during 1994-95 as per Rule-3 of the Cenvat Credit Rules, 2002.

Analysis:
Issue 1: The Tribunal found that there is no specific provision prescribing a time limit for entering credit of duty paid on capital goods in the register. The Commissioner's denial of credit was deemed unjustified. Circular No. 199/33/96-CX clarified that the time limit of six months does not apply to availing credit on capital goods. Precedents were cited to support that no time restriction for taking credit on capital goods exists. The Tribunal held that denial of credit based on procedural requirements is not valid. The Commissioner's reliance on certain decisions was deemed misplaced as they pertained to credit on inputs, not capital goods. The Tribunal set aside the Commissioner's findings.

Issue 2: The Tribunal determined that Rule 7(1)(b) of the Cenvat Credit Rules, 2002 was not applicable in the case as the duty payment was subsequent to a failure of export obligations, and the Commissioner's finding lacked a basis. Allegations of fraud or intent to evade payment of duty were not supported by evidence in the Show Cause Notice. The Commissioner's order was criticized for lacking specificity on the rules prohibiting credit availment. The installation and use of capital goods were confirmed, and challenges to this certification were dismissed. The Tribunal upheld the appellants' claim that the order extended beyond the Show Cause Notice, noting discrepancies in the Commissioner's findings.

The judgment emphasized Rule 7(1)(b) of the Cenvat Credit Rules, 2002, concerning the time-barred claim for Cenvat credit. The duty was settled by the Settlement Commission, and the respondent was entitled to the credit in 1994-95. Rule-11 applied at that time, and no interference was warranted. The High Court found no error in the impugned order and dismissed the appeal at the admission stage, concluding that no substantial question of law arose for consideration.