2017 (3) TMI 452 - AT - Central Excise

Refund claim - denial on account of non availment of Cenvat Credit and non utilization thereof - Held that - as per CCR, 2004 an assessee can avail Cenvat Credit after receipt of the goods on the strength of the original invoices. There is no time limit prescribed in CCR, 2004 for availing of Cenvat Credit on inputs - It is admitted fact that later on the appellant has availed Cenvat Credit on the said inputs on the strength of original invoices. As the appellant were not having the original invoices at the time of procurement of inputs, therefore, appellant had to pay duty through PLA after exhausting Cenvat Credit lying in their Cenvat Credit account. Later on Cenvat Credit availed strength of original invoices definitely, the appellant was not entitled to take excess refund, this is a revenue neutral situation - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of refund claim due to non-availment of Cenvat Credit and non-utilization during a specific period.

Analysis:
The appellant, located in Jammu & Kashmir, appealed against the rejection of their refund claim for not availing Cenvat Credit on inputs procured from July 2003 to April 2004. The audit revealed that the appellant did not utilize the Cenvat Credit during that period, leading to excess duty payment from PLA and subsequent refund claim rejection. The show cause notice was issued based on non-availment of Cenvat Credit on invoices. The appellant argued that the VAT department detained the invoices during the period, and Cenvat Credit can only be claimed based on original invoices, which they later received and utilized. The appellant contended that there is no time limit prescribed in the Cenvat Credit Rules, 2004 for availing credit on inputs, and thus, the refund should not have been rejected.

The respondent argued that the appellant's failure to avail Cenvat Credit at the time of goods receipt resulted in an excess refund, which is impermissible in law. The respondent maintained that the appeal should be dismissed based on this ground. After hearing both parties, the tribunal considered the submissions. The tribunal noted that as per the Cenvat Credit Rules, 2004, the assessee can avail Cenvat Credit after receiving goods based on original invoices, without a specified time limit. It was acknowledged that the appellant later availed Cenvat Credit on the inputs using the original invoices. Since the appellant did not have the original invoices at the time of procurement, they paid duty through PLA and later utilized the Cenvat Credit upon receiving the invoices. The tribunal concluded that in this revenue-neutral situation, where the excess refund was rectified by utilizing the Cenvat Credit, the proceedings against the appellant were not justified. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment clarifies the application of Cenvat Credit Rules, 2004 in cases where the original invoices are not available at the time of procurement, emphasizing that the utilization of Cenvat Credit upon receipt of invoices rectifies any excess refund situation, leading to a revenue-neutral outcome.