2020 (3) TMI 259 - AT - Service Tax

CENVAT Credit - time limit for taking credit - Credit with regard to some invoices which was of more than six months / one year from the date of issue of the invoices/ bills/ challans - amendment in the Cenvat Credit Rules vide Notification No. 21/2014-CE (NT) dated 11.07.2014 w.e.f. 01.09.2014 - HELD THAT - For availing the cenvat credit, the consequential accounting entries are to be made in the account of credit entries in RG-23A Part-I and Part-II. The Hon ble High Court found that all the requirements of this statutory rule are met by the assessee-company, but it is only with reference to accounting and entries in the cenvat register, that the dispute has arisen. Even though, in the entries made under Part-I with regard to account of inputs, the entries made showing the date is within six months, but in Part-II the entry number showing the date is beyond six months, and it is only because of this entry made in Part-II that modvat credit has been denied to assessee. The High Court further observed that in EICHER MOTORS LTD. VERSUS UNION OF INDIA 1999 (1) TMI 34 - SUPREME COURT , the Hon ble Supreme Court has held that the provisions for facility of credit granted to an assessee is a right accrued to the assessee on the date when they paid the tax on the raw material or the inputs and this right would continue until the facility available thereto gets worked out or until those goods existed. The right to cenvat credit accrues on the date when the goods or service in question is received by an assessee, and such right cannot be modified just for making accounting entry in the other books or Part-II of the cenvat credit register (RG-23A) - Credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of cenvat credit on invoices older than six months.
2. Prospective vs. retrospective application of limitation.
3. Interpretation of Cenvat Credit Rules regarding availing credit.
4. Applicability of High Court judgments in similar cases.

Analysis:

Issue 1: Admissibility of cenvat credit on invoices older than six months
The appellant, engaged in various services, availed cenvat credit on invoices older than six months, leading to a disallowance of credit by the Revenue. The dispute arose due to an amendment in the Cenvat Credit Rules, which restricted credit availing after six months of invoice issuance. The appellant contested the disallowance, leading to an appeal before the Commissioner (Appeals) who partially allowed the credit. The Tribunal further analyzed the issue and held that the right to cenvat credit accrues upon receipt of goods or services, not merely upon accounting entries in the register.

Issue 2: Prospective vs. retrospective application of limitation
The appellant argued that the limitation should be applied prospectively from the date of the amendment in the Cenvat Credit Rules. The Tribunal agreed with this argument, emphasizing that the right to cenvat credit accrues upon receipt of goods or services, as established by previous court judgments. Therefore, the limitation cannot be retrospectively applied to disallow credit on older invoices.

Issue 3: Interpretation of Cenvat Credit Rules regarding availing credit
The Tribunal examined the interpretation of the Cenvat Credit Rules in light of the appellant's case. It emphasized that the right to cenvat credit is established upon receipt of goods or services, and the mere accounting entries in the register do not affect this right. The Tribunal relied on previous court judgments to support its interpretation and allowed the cenvat credit to the appellant.

Issue 4: Applicability of High Court judgments in similar cases
The Tribunal referred to a High Court judgment in a similar case where the court upheld the admissibility of credit on duty paid inputs used in manufacturing. The court emphasized that the right to cenvat credit accrues upon receipt of goods or services, and accounting entries should not affect this right. The Tribunal followed this precedent and allowed the cenvat credit to the appellant, providing consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, upholding the admissibility of cenvat credit on older invoices and emphasizing the prospective application of limitations. The judgment highlighted the importance of the right to cenvat credit accruing upon receipt of goods or services, as established by previous court judgments.