2012 (10) TMI 548 - AT - Central Excise

Demand of excess credit availed on capital goods along with interest and penalty alleged that assessee took 100% of Cenvat credit in the first financial year Held that - As per the provision of Rule 4(2)(b) of the CCR, 2004 and assessee is entitled to 100% of Cenvat credit in the year in which the capital goods, which are under heading 6804 of the First Schedule of the Excise Tariff Act - appellant has taken Cenvat credit only on those goods which are falling under heading 6804 of the First Schedule of the Excise Tariff Act. Therefore the appellants are entitled for 100% of the Cenvat credit as per the provision of Rule 4(2)(b) of the Cenvat Credit Rules, 2004 - order is set aside, appeal is allowed

Summary

Issues: Appeal against excess credit availed on capital goods.

Analysis:
The appellant filed an appeal against the order directing them to pay excess credit availed on capital goods along with interest and penalty. The appellant had purchased various capital goods and availed 100% Cenvat credit on them. However, a show-cause notice was issued for availing excess credit, leading to confirmation of demand, interest, and penalty by the authorities. The appellant contended that Rule 4 of Cenvat Credit Rules, 2004 allowed them to claim 100% credit on the capital goods falling under a specific heading. On the other hand, the Revenue argued that since the goods were classified as capital goods in the appellant's records, they were not entitled to claim 100% credit. After detailed hearings, the judge noted that Rule 4(2)(b) of the Cenvat Credit Rules, 2004 allowed for 100% credit on goods under a particular heading. As the appellant had availed credit only on goods falling under that specific heading, they were entitled to the full credit amount as per the rule. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The stay application was also disposed of accordingly.