Cenvat credit on stock inputs and delayed availment upheld where no express time limit barred the claim.

Cenvat credit on duty-paid inputs, work-in-process and finished goods in stock remained admissible when the duty regime changed and the earlier exemption no longer applied; Rule 3(1) and Rule 3(2) supported availment of credit in such circumstances. Credit also could not be denied merely because it was taken later, since the relevant provision did not prescribe any mandatory time limit and the reference to taking credit immediately was permissive rather than a bar. The assessee's entitlement to credit was therefore upheld on both grounds.

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Issues: (i) Whether Cenvat credit on inputs, work-in-process and finished goods lying in stock on the date of change in duty regime was admissible under Rule 3 of the Cenvat Credit Rules, 2002. (ii) Whether Cenvat credit could be denied for being taken after a delay, in the absence of any prescribed time limit.

Issue (i): Whether Cenvat credit on inputs, work-in-process and finished goods lying in stock on the date of change in duty regime was admissible under Rule 3 of the Cenvat Credit Rules, 2002.

Analysis: The benefit earlier available at 4% duty was altered by Notification No. 10/03-CE dated 01.03.2003, under which duty stood increased and the condition of non-availment of credit was removed. On that change, the final product ceased to enjoy the earlier exemption to that extent. Rule 3(2) permitted credit where goods ceased to be exempted, and even otherwise Rule 3(1) allowed credit on duty-paid inputs used in manufacture. The inputs in question were duty paid and were relevant to the manufacture of the final product.

Conclusion: Credit was admissible under Rule 3(1) and Rule 3(2) of the Cenvat Credit Rules, 2002, in favour of the assessee.

Issue (ii): Whether Cenvat credit could be denied for being taken after a delay, in the absence of any prescribed time limit.

Analysis: The relevant credit provision stated that credit may be taken immediately on receipt of inputs, but it did not prescribe any mandatory limitation period. The language was permissive and did not convert immediacy into a condition precedent for availment. In the absence of an express time bar, delayed availment could not by itself defeat the substantive entitlement.

Conclusion: No time limit barred the availment of credit, and the denial on the ground of delay was unsustainable, in favour of the assessee.

Final Conclusion: The denial of Cenvat credit was unsustainable on both grounds, and the assessee's credit entitlement was upheld.

Ratio Decidendi: Where a duty regime change removes the earlier exemption and goods cease to be exempted, Cenvat credit on eligible inputs in stock becomes allowable, and in the absence of an express statutory time limit, credit cannot be denied merely because it was taken later.

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