2012 (10) TMI 907 - AT - Central Excise

Cenvat credit on capital goods before registration - Held that - Cenvat credit was availed of in the year 2006-07, when the assessee had not yet registered under Rule 9 of the Central Excise Rules, the assessee did not utilize the Cenvat credit - It is only after registration, in the subsequent year, they have utilized the entire Cenvat credit which was standing to their credit cenvat credit allowed in favor of assessee

Summary

Issues Involved:
1. Stay of operation of the impugned order.
2. Interpretation of Notification No. 8/2003 regarding credit by SSI unit for capital goods.
3. Utilization of Cenvat credit by an assessee registered under Rule 9 of the Central Excise Rules, 2002.

Analysis:

1. The Revenue filed an application for a stay of the operation of the impugned order. The Tribunal noted that the issue involved had already been settled in favor of the assessee in a previous case. The Commissioner (Appeals) had held that under Notification No. 8/2003, there was no bar for an SSI unit to take credit for capital goods. The Tribunal referred to a previous decision in the case of Progressive Systems, where it was held that there was no prohibition for a manufacturer working as an SSI unit to take credit for capital goods. The appeal filed by the Revenue against this decision was also dismissed by the Hon'ble Karnataka High Court.

2. The Hon'ble Karnataka High Court's decision clarified that an assessee must be registered under Rule 9 of the Central Excise Rules, 2002, as a condition precedent for utilizing Cenvat credit. The Court explained that even though Rule 4(2)(a) allows only 50% utilization of Cenvat credit in the year it is availed, there is no requirement to utilize the credit in the same year. Rule 4(2)(b) permits utilization in any subsequent year to the full extent. Therefore, in the case under consideration, the assessee had availed Cenvat credit in 2006-07 before registering under Rule 9, and later utilized the credit in full after registration. The Assessing Officer and the First Appellate Authority's findings that the assessee could not have utilized 100% credit were deemed erroneous by the Tribunal, which set aside the irregularity and allowed the Cenvat credit in the subsequent year.

3. Based on the above analysis and the precedent set by the Hon'ble Karnataka High Court, the Tribunal found no infirmity in the impugned order. Consequently, the Tribunal upheld the order, dismissed the appeal, and also dismissed the stay application.

This detailed analysis of the issues involved in the judgment provides a comprehensive understanding of the Tribunal's decision and the legal principles applied in the case.