2022 (10) TMI 580 - SC - Central Excise

CENVAT Credit - removal of Cenvatted capital goods - Interpretation of statute - proviso added in 2007 to sub-rule (5) of Rule 3 to Cenvat Credit Rules, 2004 - clarificatory in nature or not - retrospective effect or not - whether in absence of said proviso the words as such appearing in sub-rule (5) of Rule 3 contemplated the removal of cenvated capital goods without use shall be the substantial question of law for adjudication in this appeal? HELD THAT - Admittedly, the appellant had used the goods in question in its factory at Goa from 1999 to 2004. As such, the appellant was entitled to the benefit of Rule 57-S(2)(b) of 1944 Rules. It appears that though the said proviso to sub-rule (5) of Rule 3 existed in the 2002 Rules, by a legislature slip, it was not included in the 2004 Rules. As such, to clarify the position, an amendment was carried out in 2007 to bring it in tune with Rule 57-S(2)(b) of the 1944 Rules. Having held the 2007 amendment to be clarificatory, the effect would be that the said proviso existed in the statute book from 2004 itself. This being the position, the appellant was entitled to take benefit of the said proviso and make an adjustment as per the said proviso. The question of law as framed by the High Court is held in favour of the appellant. The demand issued by the revenue is quashed and set aside - Appeal allowed.

Summary

Issues:
Appeal against High Court order on clarificatory nature of proviso in CENVAT Credit Rules 2004.

Analysis:
The appeal challenged a High Court order regarding the nature of a proviso added in 2007 to sub-rule (5) of Rule 3 of the CENVAT Credit Rules, 2004. The High Court held that the proviso was clarificatory in nature, citing a previous judgment. The factual background involved the appellant purchasing capital goods in 1999-2004, using them in Goa, and later shifting them to Himachal Pradesh in 2005. The proviso in question was present in the 2002 Rules but omitted in the 2004 Rules, only to be reintroduced in 2007 to align with the Central Excise Rules of 1944. The appellant was entitled to benefit under the 1944 Rules due to the usage of goods in Goa. The Court noted a legislative oversight in omitting the proviso in 2004 and deemed the 2007 amendment as clarificatory, thus ruling in favor of the appellant.

The Court emphasized that the appellant was entitled to the benefit of the proviso added in 2007 since it was clarificatory and should have been considered from 2004 itself. Consequently, the appeal was allowed, and the High Court's judgment was quashed. The demand by the revenue was set aside, and the appellant was granted relief. The Court decided not to delve into the interpretation of the term "as such" due to the clarificatory nature of the amendment. Pending applications were disposed of accordingly.