TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>High Court affirms Tribunal's decision on Cenvat credit reversal, supporting assessee's entitlement.</h1> The High Court upheld the Tribunal's decision, ruling in favor of the assessee in a dispute regarding the reversal of Cenvat credit on inputs used in ... CENVAT credit - subsequently exempted final goods - Tractors and parts used within the factory production for manufacturing of final goods - amendment of the scheme vide Notification dated 09.07.2004 - whether Cenvat credit availed by a dealer on such quantity of duty-paid inputs, which is used in the manufacture of subsequently exempted final goods, is liable to be reversed or not? - Held that: - it is not a matter of dispute that the assessee has paid the duty on inputs used in the indicated manufacturing of final goods, the assessee has maintained separate accounts/record, duly entered credit of duty-paid on the inputs in manufacture of final goods and validly availed the Cenvat credit. Therefore, the same cannot be reversed on the ground that the final product (i.e. agricultural Tractors) were subsequently exempted from tax - the assessee is held entitled to the benefit of Cenvat credit - appeal dismissed - decided against Revenue. Issues:1. Whether Cenvat credit availed by a dealer on inputs used in the manufacture of exempted goods is liable to be reversedRs.2. Whether the Tribunal erred in not appreciating the relevant sub-rule of CENVAT Credit Rules, 2002 and in ignoring a Supreme Court judgmentRs.Analysis:Issue 1:The case involved a dispute where the assessee, engaged in manufacturing agricultural tractors and parts, availed Cenvat credit on inputs used in the production of final products. The revenue claimed that the assessee wrongly claimed the credit after a scheme amendment. The Tribunal held that once the credit is legally taken and utilized on dutiable final products, it need not be reversed if the final product becomes exempt subsequently. Various judgments, including those of the Hon'ble Apex Court, supported this stance. The Tribunal's decision was based on the principle that the right to avail credit is indefeasible once legally taken, and there is no provision for reversal unless the credit was illegally taken or utilized. The Ministry of Finance also issued a circular supporting the admissibility of credit on common inputs used in exempted and dutiable final products. The High Court upheld the Tribunal's decision, emphasizing that the assessee maintained proper records and validly availed the credit, hence ruling in favor of the assessee.Issue 2:The Tribunal's decision was challenged by the revenue, arguing that the Tribunal erred in granting Cenvat credit to the assessee based on the relevant sub-rule of CENVAT Credit Rules, 2002. The revenue contended that the credit should not be allowed on inputs used in exempted goods. However, the High Court rejected this argument, citing various judgments and circulars supporting the assessee's entitlement to the credit. The High Court dismissed the appeal by the revenue, emphasizing that the revenue failed to provide contrary judgments, and the existing legal precedents favored the assessee's position. The High Court concluded that the assessee was entitled to the benefit of Cenvat credit under the circumstances of the case, leading to the dismissal of the revenue's appeal.
TaxTMI 
TaxTMI 
