2018 (1) TMI 149 - AT - Central Excise

CENVAT credit - time limitation - Held that - the denial of the credit on the ground of limitation, would not be justified, especially when there is no dispute about the receipt of the inputs and their utilization in the manufacture of the final product and duty paid character of the inputs. The non-availment of ACD paid on the inputs, while availing the credit of basic excise duty and cess paid on the same inputs, can be said to be a result of inadvertent mistake on the part of the assessee. As soon as the said mistake was brought to their notice, by the audit, they availed the credit immediately - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of Cenvat credit for additional customs duty (ACD) after a delay of 4 years.
2. Interpretation of Rule 4 of Cenvat Credit Rules, 2004 regarding the immediate availment of credit upon receipt of inputs.
3. Applicability of a High Court decision regarding time limits for availment of credit.
4. Justification for denying credit based on a time limit.

Analysis:

1. The appellant, engaged in manufacturing Electrical Panels, inadvertently failed to avail the Cenvat credit of additional customs duty (ACD) paid by a registered dealer for imported raw materials. After an audit revealed the mistake, the appellant sought to rectify the error by subsequently availing the credit.

2. The Revenue objected to the delayed availment of the ACD credit, citing Rule 4 of Cenvat Credit Rules, 2004, which emphasizes immediate credit availment upon input receipt. The lower authorities held that the term "immediately" implies taking credit as soon as possible, and delayed claims may not be permissible. They argued that the law does not support belated credit claims.

3. The appellant's representative referenced a decision by the Hon'ble Allahabad High Court in a similar case, emphasizing that the absence of a specific time limit in the law should not hinder legitimate credit claims. The Revenue contended that the High Court's decision was not directly relevant to the present case due to differences in the rules under consideration.

4. Upon reviewing the High Court's decision, it was noted that the absence of a time limit in Rule 4 of Cenvat Credit Rules, 2004, akin to the erstwhile Rule 57G of Central Excise Rules, 1944, indicated that denial of credit based on time limitations would not be justified. The judgment highlighted that the denial of ACD credit, despite availing basic excise duty and cess credit, was due to an inadvertent error by the appellant, promptly rectified upon discovery. Therefore, the denial of credit was deemed unwarranted, and the appeal was allowed with consequential benefits to the appellant.