2013 (3) TMI 115 - AT - Central Excise

Cenvat credit denied as not availed immediately on receipt of the inputs - appellants are manufacturers of steel and iron have captive mines - Held that - Sub-rule (1) of Rule 4 of the Cenvat Credit Rules, 2004 prescribes that a manufacturer can avail Cenvat credit in respect of certain inputs immediately on their receipt and there is no time limit period prescribed in these rules in this regard. The word may in sub-rule (1) of Rule 4 cannot be read as shall . The Department s contention would have been correct if sub-rule (1) of Rule 4 had provided that Cenvat credit in respect of inputs shall be taken immediately on receipt of the inputs. See para 10 of the Board s Circular No. 345/2/2000-TRU, dated 29-8-2000 & Coromandel Fertilizers Ltd. v. CCE (A) (2008 (8) TMI 333 - CESTAT, BANGALORE), Steel Authority of India Ltd. v. CCE (2001 (1) TMI 144 - CEGAT, NEW DELHI) and Tamilnadu Petroproducts Ltd. v. CCE reported in 2003 (160) E.L.T. 199 (2003 (3) TMI 217 - CEGAT, CHENNAI). Moreover in this case there was a valid reason also for not taking the credit during April, 2006 to December 2006 period, as the judgments of the Apex Court and the Tribunal on the issue of eligibility for Cenvat credit of the inputs used in the mines were against the appellant and this issue was ultimately decided in the appellant s favour sometimes in 2008 - the impugned order is not sustainable. The same is set aside. The appeal is allowed.

Summary

Issues:
1. Denial of Cenvat credit and recovery along with interest for delayed availing of credit.
2. Imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.

Analysis:
1. The appellants, steel and iron manufacturers with captive mines, received inputs during April 2002 to December 2006 but did not take Cenvat credit at that time. Subsequently, they availed credit from July 2007 to March 2007 after a Supreme Court judgment. The department issued a notice seeking denial of credit, recovery, and penalty. The Commissioner confirmed the demand and imposed penalties. The appellant challenged this, arguing that there is no time limit for availing credit after input receipt. The Board's circular clarified that immediate availing is not mandatory. Previous tribunal cases supported delayed credit availing. The department contended that immediate availing is necessary, citing a tribunal judgment. The appellant justified the delayed availing post-Supreme Court's favorable judgment.

2. The Tribunal analyzed the Cenvat Credit Rules, emphasizing that immediate availing is not mandatory as the rules use "may" instead of "shall." The Board's circular and previous tribunal decisions supported this interpretation. The delay in availing credit was justified due to adverse judgments until the Supreme Court's decision favored the appellant. The Tribunal found the department's argument based on a single bench tribunal judgment flawed. Considering the lack of a specified time limit and the circumstances surrounding the delayed availing of credit, the Tribunal set aside the impugned order, allowing the appeal.

This detailed analysis covers the issues of denial of Cenvat credit, recovery, penalty imposition, and the interpretation of rules and circulars, leading to the Tribunal's decision to set aside the order and allow the appeal.