2009 (8) TMI 591 - AT - Central Excise

Cenvat Credit- Capital goods- The appellant seeks to vacate the demand of Rs. 6,31,311/- being Cenvat Credit on capital goods held to be availed irregularly by them, applicable interest and penalty imposed on them. Held that- We find that the Additional Commissioner wrongly held that the assessee availed entire capital goods credit in 2007-08 contrary to legal provisions. We find that as per Rule 4(2) of CCR, an assessee can avail capital goods credit upto 50% in the year of receipt of the goods and balance in the subsequent financial years. There is no prescription that credit to any extent has to be availed in the year of receipt of capital goods. In the instant case entire credit has been availed in 2007-08, the year following receipt of the goods. This availment is not inconsistent with the legal provisions. In the circumstances, we find the impugned order not in accordance with law. We set aside the same and allow this appeal.

Summary

The Appellate Tribunal CESTAT, Bangalore, consisting of Members M.V. Ravindran and P. Karthikeyan, heard an appeal from M/s. Progressive Systems, Bangalore, seeking to vacate a demand of Rs. 6,31,311 for Cenvat credit on capital goods, interest, and penalty imposed by the Additional Commissioner and affirmed by the Commissioner (Appeals). The issue was whether the assessee was eligible to avail Cenvat credit on capital goods procured during 2006-07. The assessee, a Small Scale Industry (SSI) unit, had received capital goods during 2006-07 without registration and had availed the full exemption. The Additional Commissioner alleged the assessee availed the entire credit on capital goods in 2007 instead of 50% in 2006-07, making them ineligible. The assessee contended they had availed the credit in 2006-07 and relied on rulings supporting their position. The Commissioner (Appeals) found the issue was one of availment, not utilization, and upheld the demand. The Tribunal ruled that there was no bar for an SSI unit to take Cenvat credit on capital goods received during 2006-07, contrary to the Additional Commissioner's decision. They held that the assessee's actions were consistent with legal provisions and set aside the impugned order, allowing the appeal. The stay application was also disposed of. The order was pronounced on 17-8-2009.