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2025 (3) TMI 623 - AT - Central ExciseEligibility to avail CENVAT credit while transferring the capital goods which are cleared as such in the same financial year - HELD THAT - As per Rule 4(2)(a) of CENVAT Credit Rules 2004 CENVAT credit in respect of capital goods is permitted of the whole amount of duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year. Following the above the Appellant is eligible for claiming the entire CENVAT credit as claimed by them. Hence the impugned order confirming demand and imposing penalty is unsustainable and is set aside. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether the Appellant was entitled to avail the full CENVAT credit for capital goods that were received and cleared as such within the same financial year, or if the credit availed was ineligible, leading to the confirmation of demand by the Adjudication authority and the imposition of a penalty. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents The relevant legal framework involves the interpretation of Rule 4(2)(a) of the CENVAT Credit Rules, 2004. This rule states that CENVAT credit in respect of capital goods received in a factory or the premises of the provider of output service can be taken up to fifty percent of the duty paid on such capital goods in the same financial year. However, a proviso allows the full amount of CENVAT credit if the capital goods are cleared as such within the same financial year. The Appellant relied on this proviso to justify the full credit availed. The Appellant also referenced precedents from cases such as M/s NeelKamal Ltd vs CCE and M/s Indo-Shell Mould Ltd vs CCE, which supported the interpretation that full CENVAT credit is permissible under the conditions outlined in the proviso. Court's interpretation and reasoning The Tribunal interpreted Rule 4(2)(a) as allowing the Appellant to claim the full CENVAT credit since the capital goods were cleared as such within the same financial year. The Tribunal found that the lower authority had ignored the applicability of the first proviso under Rule 4(2)(a), which was crucial to the Appellant's case. Key evidence and findings The key evidence included the timeline of events: the importation of the printing unit, the filing of the Bill of Entry, the clearing of the machinery, and the availing of the CENVAT credit. The Appellant had imported the machinery on 07.02.2009, cleared it on the same day, and availed the CENVAT credit on 26.03.2009. The Tribunal noted that these actions were in compliance with the proviso to Rule 4(2)(a). Application of law to facts The Tribunal applied the proviso of Rule 4(2)(a) to the facts, determining that the Appellant was entitled to the full CENVAT credit because the capital goods were cleared as such in the same financial year they were received. This application of the law to the facts led to the conclusion that the demand and penalty imposed by the Adjudication authority were unsustainable. Treatment of competing arguments The Appellant argued that the demand was barred by limitation, as the Show Cause Notice was issued almost a year after the credit was availed. However, the Tribunal's decision primarily focused on the interpretation of Rule 4(2)(a) and the applicability of the proviso, which was sufficient to resolve the issue in favor of the Appellant. The Authorized Representative for the Respondent reiterated the lower authority's position, but the Tribunal found this unpersuasive in light of the clear language of the proviso. Conclusions The Tribunal concluded that the Appellant was entitled to the full CENVAT credit under the proviso to Rule 4(2)(a) of the CENVAT Credit Rules, 2004. Consequently, the order confirming the demand and imposing a penalty was set aside. SIGNIFICANT HOLDINGS The Tribunal held that the Appellant was eligible for the full CENVAT credit as per the proviso to Rule 4(2)(a) of the CENVAT Credit Rules, 2004, since the capital goods were cleared as such within the same financial year. This interpretation of the rule was crucial in determining the outcome of the case. Preserve verbatim quotes of crucial legal reasoning The Tribunal stated: "As per Rule 4(2)(a) of CENVAT Credit Rules, 2004, CENVAT credit in respect of capital goods is permitted of the whole amount of duty paid on such capital goods in the same financial year, if such capital goods are cleared as such in the same financial year." Core principles established The core principle established is that under Rule 4(2)(a) of the CENVAT Credit Rules, 2004, the full CENVAT credit is permissible if capital goods are cleared as such within the same financial year they are received. This principle underscores the importance of adhering to the specific conditions outlined in the proviso for claiming CENVAT credit. Final determinations on each issue The Tribunal determined that the Appellant's actions were in compliance with the legal requirements for availing full CENVAT credit, and therefore, the demand and penalty imposed by the Adjudication authority were unjustified. The appeal was allowed, and the order was set aside, with consequential relief granted in accordance with the law.
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