Tribunal Upholds Denial of Cenvat Credit on Capital Goods

The Tribunal rejected the appeal against the order disallowing Cenvat credit on capital goods under Rule 6(4) of the Cenvat Credit Rules, 2004. The appellants, claiming exemption under Notification No. 30/04-C.E., were denied the credit as they had received capital goods after availing full exemption. The Tribunal emphasized that eligibility for credit is determined at the date of receipt of capital goods, irrespective of future intentions. While the demand for duty and interest was upheld, the penalty was set aside as the case involved legal interpretation rather than intentional wrongdoing.

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Issues involved: Appeal against order of Commissioner (Appeals) regarding eligibility of Cenvat credit on capital goods u/s Rule 6(4) of Cenvat Credit Rules, 2004.

Summary:
The appellants, engaged in manufacturing cotton and blended yarn, availed exemption under Notification No. 30/04-C.E. from 1-12-04. They received capital goods in March 2005 and took Cenvat credit, which was disallowed by the Department citing Rule 6(4) of the Cenvat Credit Rules, 2004. The original authority confirmed the demand, upheld by the Commissioner (Appeals).

The advocate argued that the appellants intended to avail benefits under Notification No. 29/04 as well, and relied on various tribunal and Supreme Court decisions to support their case. The Department contended that eligibility for credit on capital goods is determined at the date of receipt, and since the appellants had availed full exemption under Notification No. 30/04, they were not eligible for the credit.

The Tribunal held that eligibility for credit on capital goods cannot depend on future intentions of the assessee. The relevant date for determining eligibility is the date of receipt of capital goods. The Tribunal distinguished the case from the Supreme Court decision cited by the advocate, stating that it involved a different scenario. The appeal was rejected concerning the demand of duty and interest, but the penalty was set aside due to the case involving interpretation of the law rather than misstatement or suppression of facts.

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