2024 (7) TMI 5 - AT - Central Excise

CENVAT Credit - inputs lying in stock as on 30.06.2017 and which have been used in manufacture of finished goods which have been cleared on payment of GST post 30.06.2017 - capital goods in terms of Rule 6(4) of CCR, 2004, used in manufacture of exempted goods after a period of two years from the date of commencement of commercial production - benefit of exemption N/N. 30/2004-CE. CENVAT Credit on inputs - Rule 6 (1) of Cenvat Credit Rules, 2004 - HELD THAT - As per the facts, the respondent has claimed the cenvat credit on the inputs lying in stock as on 30.06.2017 which shows that the inputs on which the cenvat credit was claimed have not been used in manufacture of goods cleared under Notification No. 30/2004-CE, therefore, such credit cannot be denied. As per the condition of the N/N. 30/2004-CE, it is clear that the said condition is applicable only in respect of those inputs which were used in the manufacture of excisable goods which is cleared under N/N. 30/2004-CE - In the present case the inputs lying in stock as on 30.06.2017 were not used in the manufacture of excisable goods which were cleared under N/N. 30/2004-CE. For the obvious reason that those inputs were used in the manufacture of goods on which GST was applicable. Therefore, the entire basis of the Revenue that only due to availing the exemption N/N. 30/2004-CE, the cenvat credit is not admissible, is devoid of merit and without any legal basis. Therefore, the cenvat credit on inputs was rightly allowed by the Learned Commissioner. CENVAT Credit on capital goods - Rule 6 (4) of Cenvat Credit Rules, 2004 - HELD THAT - Though the appellant is eligible for cenvat credit but availment of credit is deferred for 2 years from the date of commencement of production or installation of capital goods. Though the cenvat credit was accrued to the Respondent but the respondent in a case is entitled to avail the same after 2 years due to the reason that the respondent have been availing exemption N/N. 30/2004-CE - this restriction was only because the respondent have been availing the exemption notification however the exemption notification was rescinded on 30.06.2017 and immediately thereupon the respondent became entitled for the cenvat credit on capital goods. Therefore, the said cenvat credit is admissible to the respondent. Moreover, thereafter the capital goods has been used for the manufacture of goods which is not exempted and liable for payment of GST. The respondent is entitled for the cenvat credit on inputs as well as on capital goods - the impugned ordeer is sustained - appeal of Revenue dismissed.

Summary

Issues involved:
1. Admissibility of cenvat credit on inputs used in the manufacture of finished goods post-GST implementation.
2. Admissibility of cenvat credit on capital goods under Rule 6(4) of CCR, 2004 after the rescission of an exemption notification.

Analysis:
1. The appeal concerned the admissibility of cenvat credit on inputs and capital goods. The Revenue contended that the credit was not available due to the exemption Notification No. 30/2004-CE. However, the Respondent argued that the credits were valid as they were used for goods cleared post-GST implementation and not under the said notification. The Tribunal found that the inputs claimed for credit were not used in goods cleared under the exempted notification, thus allowing the credit as per the conditions of the notification.

2. Regarding the cenvat credit on capital goods, the Revenue argued against its admissibility under Rule 6(4) of CCR, 2004, due to the exemption notification. The Respondent claimed the credit was valid as the exemption was rescinded, making them eligible for the credit. The Tribunal concurred, stating that the Respondent could claim the credit post-exemption rescission, as the goods were now taxable under GST. The Tribunal upheld the Commissioner's decision, allowing the cenvat credit on both inputs and capital goods.

3. The Tribunal emphasized that the Respondent became entitled to the cenvat credit on capital goods after the exemption rescission, as per Rule 6(4) of CCR, 2004. The judgment highlighted the distinction between goods cleared under the exemption notification and those post-GST implementation, affirming the Respondent's right to claim the cenvat credit. The Tribunal dismissed the Revenue's appeal, upholding the impugned order and allowing the cenvat credit on both inputs and capital goods.

4. The judgment was pronounced on 26.06.2024 by the Appellate Tribunal CESTAT AHMEDABAD, with detailed analysis and legal reasoning provided for the admissibility of cenvat credit on inputs and capital goods post-GST implementation and exemption rescission. The Respondent's entitlement to the credit was affirmed based on the specific circumstances and legal provisions governing cenvat credit eligibility in the given scenario.