2012 (8) TMI 106 - AT - Central Excise

Appellate Tribunal CESTAT allows cenvat credit on capital goods for exempted final products.

The Appellate Tribunal CESTAT, New Delhi allowed the appeal regarding the denial of cenvat credit on capital goods when the final product was exempted ... Accrual of cenvat credit on capital goods - entitlement to cenvat credit despite subsequent exemption of final product - set-off of cenvat credit against duty payable - reversal or denial of accrued credit when no duty payable due to exemption - right accrued is not deniable unless law abrogates such rightAccrual of cenvat credit on capital goods - entitlement to cenvat credit despite subsequent exemption of final product - reversal or denial of accrued credit when no duty payable due to exemption - Whether part of the cenvat credit on capital goods, once accrued, could be disallowed on account of a subsequent exemption of the final product which resulted in no duty payable. - HELD THAT: - The Tribunal recorded that accrual of cenvat credit on capital goods by the appellant was not in dispute. Revenue denied the later claim for the remaining credit on the ground that no duty was payable when the final product became exempt. Relying on precedent cited by the appellant, the Tribunal held that reversal of legitimately earned cenvat credit is unwarranted merely because the final product is subsequently exempted. The determinative legal principle applied is that an accrued right to credit cannot be denied unless statute unequivocally abrogates that right; absent such abrogation or illegitimacy of the credit, denial is impermissible. Applying this principle to the facts, the Tribunal found the appellant entitled to the claimed part of the cenvat credit on capital goods.The claim for part of the cenvat credit on capital goods was allowed and the denial by Revenue set aside.Final Conclusion: Appeal allowed: the Tribunal held that legitimately accrued cenvat credit on capital goods cannot be denied solely because the final product later became exempt, and therefore the appellant is entitled to the claimed credit. The Appellate Tribunal CESTAT, New Delhi allowed the appeal regarding the denial of cenvat credit on capital goods when the final product was exempted from duty. The Tribunal held that the appellant is entitled to claim part of the cenvat credit on capital goods based on previous judgments. The appeal was allowed.