2019 (2) TMI 571 - HC - Central Excise

CENVAT credit - duty paying documents - rule 9(1)(bb) of the Cenvat Credit Rules, 2004 - It was submitted that, sub-rule (bb) of sub-rule (1) of rule 9 of the rules is ultra vires section 37 of the Central Excise Act, 1944 and section 94 of the Finance Act, 1994 to the extent the same provides for disqualification for availing cenvat credit - Held that - The court is of the view that the matter requires consideration. Issue Rule. Issue Notice as to Interim relief returnable on 13th March, 2019.

Summary

Issues: Challenge to denial of cenvat credit under rule 9(1)(bb) of the Cenvat Credit Rules, 2004.

The petitioner challenged the denial of cenvat credit under rule 9(1)(bb) of the Cenvat Credit Rules, 2004, arguing that rule 3 does not disqualify availing cenvat credit in cases of additional tax due to nonpayment or fraud. The petitioner contended that rule 9 pertains to documents and accounts, not eligibility for cenvat credit, and thus sub-rule (bb) is ultra vires sections of the Central Excise Act and Finance Act.

The advocate cited the Baroda Rayon Corporation Ltd. case where it was held that a similar rule did not allow for the prescription of time limits for taking credit, supporting the argument against the disqualification of cenvat credit. Various other submissions were made in support of the petitioner's case.

Considering the submissions, the court found merit in the petitioner's arguments and decided to issue a rule and notice for interim relief returnable on a specific date. As an ad-interim measure, the respondents were restrained from taking coercive action against the petitioner based on the impugned order-in-original. Direct service was permitted regarding one of the respondents.