Cenvat credit on pre-registration input services allowed where no express prohibition exists under the credit rules.

Cenvat credit on input services was held admissible where the Cenvat Credit Rules, 2004 contained no express bar against credit merely because the services were received before Central Excise registration or before commencement of manufacturing. Rule 3(1) was treated as the enabling provision for availment of credit on input services received on or after 10 September 2004, and Rule 3(2) was found inapplicable to the department's objection on these facts. Earlier Tribunal decisions supporting credit despite pre-registration receipt of services were also relied upon. The denial of credit was therefore held unsustainable, and the assessee was held entitled to the disputed credit.

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Issues: Whether cenvat credit of service tax on input services received before Central Excise registration and before commencement of manufacturing could be denied in the absence of any express prohibition in the Cenvat Credit Rules, 2004.

Analysis: Rule 3(1) of the Cenvat Credit Rules, 2004 is the enabling provision for availment of credit on input services received by a manufacturer, and the rules only require that the input service be received on or after 10 September 2004. The rules do not contain any specific restriction barring credit merely because the manufacturer had not yet obtained Central Excise registration. The reliance placed by the department on Rule 3(2) was held inapposite because that sub-rule did not govern the factual situation relating to input services in the manner contended by the department. Support was also drawn from earlier Tribunal decisions holding that credit cannot be denied solely on the ground that the input service was received before registration.

Conclusion: The denial of cenvat credit was held to be unsustainable, and the assessee was held entitled to the disputed credit.

Ratio Decidendi: In the absence of an express prohibition in the Cenvat Credit Rules, 2004, cenvat credit on input services cannot be denied merely because the services were received before Central Excise registration.

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