Cenvat credit timing rules barred August duty payment from later-period credit, but the remaining credit was set off against September liability.
Cenvat credit could not be used to discharge August 2003 duty by relying on credit attributable only to September 2003, because Rule 3(3) permitted utilisation only of credit available in the relevant period; the August demand was therefore upheld. The Tribunal also accepted that, once that earlier adjustment was disallowed, the credit of Rs. 81,810 remained available for set-off against the September 2003 liability, and the assessee's failure to prove receipt of goods on 30.09.2003 did not prevent that adjustment. The September demand was accordingly set aside, leaving only partial relief.
Issues: (i) Whether duty for August 2003 could be paid by utilising Cenvat credit attributable to September 2003 under Rule 3(3) of the Cenvat Credit Rules, 2002 read with Rule 8 of the Central Excise Rules, 2002. (ii) Whether the duty demand of Rs.20,329 for September 2003 could survive when the credit relatable to the relevant inputs was found to be available for adjustment.
Issue (i): Whether duty for August 2003 could be paid by utilising Cenvat credit attributable to September 2003 under Rule 3(3) of the Cenvat Credit Rules, 2002 read with Rule 8 of the Central Excise Rules, 2002.
Analysis: Duty under Rule 8 of the Central Excise Rules, 2002 was required to be discharged by the prescribed due date. The Tribunal held that the proviso to Rule 3(3) of the Cenvat Credit Rules, 2002 did not permit utilisation of credit not available on the last day of the relevant month for payment of that month's duty. The appellant's plea that non-payment by the due date took the case outside Rule 3(3) was rejected.
Conclusion: The demand of Rs.81,810 for August 2003 was upheld.
Issue (ii): Whether the duty demand of Rs.20,329 for September 2003 could survive when the credit relatable to the relevant inputs was found to be available for adjustment.
Analysis: The finding of the lower appellate authority that the appellant failed to establish receipt of the goods on 30.09.2003 was accepted. At the same time, once the credit of Rs.81,810 used for August 2003 was denied, that amount remained available for adjustment against the September 2003 liability. On that basis, the smaller demand could be set off against available credit.
Conclusion: The demand of Rs.20,329 for September 2003 was set aside.
Final Conclusion: The appeal succeeded only to the extent of the second demand, while the first demand was sustained, resulting in a partial relief to the appellant.
Ratio Decidendi: Cenvat credit can be utilised only to the extent available for the relevant period, but where credit is found to remain available after denial of an earlier adjustment, it may be applied against the later duty liability.
TaxTMI 
AI Drafter ✕
TaxTMI 
