Cenvat credit on Sugar Cess and recredit after reversal under protest cannot be denied on limitation grounds.

Cenvat credit on Sugar Cess was treated as admissible where the governing law, read with section 3(4) of the Sugar Cess Act, 1982, incorporates the Central Excise framework by reference; the Tribunal followed the Karnataka High Court view and distinguished contrary rulings that did not address Sugar Cess credit specifically. Recredit of duty reversed under protest was also held not barred by limitation, because the reversal had been made with liberty to recredit and the age of the original invoices did not by itself create a time bar. The denial of both credit and recredit was therefore unsustainable, and consequential relief followed.

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Issues: (i) whether Cenvat credit of Sugar Cess was admissible under the Cenvat Credit Rules, 2004; (ii) whether recredit of the reversed amount was barred by limitation under the Cenvat Credit Rules, 2004.

Issue (i): whether Cenvat credit of Sugar Cess was admissible under the Cenvat Credit Rules, 2004.

Analysis: The Tribunal found that the Karnataka High Court had already considered the very question of entitlement to credit on Sugar Cess and had answered it by examining Section 3(4) of the Sugar Cess Act, 1982, which incorporates the Central Excise Act and the rules made thereunder by reference. That decision had attained finality. The decisions relied upon by the original authority were held to be distinguishable because they did not deal with the admissibility of credit on Sugar Cess under the Sugar Cess Act.

Conclusion: Cenvat credit of Sugar Cess was held admissible, in favour of the assessee.

Issue (ii): whether recredit of the reversed amount was barred by limitation under the Cenvat Credit Rules, 2004.

Analysis: The Tribunal noted that the credit for the relevant periods had either been taken initially within the relevant period or taken month-wise and later reversed under protest on objection by the revenue, with liberty reserved to take recredit. On that basis, the matter was treated as one of recredit, and the circular dealing with recredit was held applicable. The Tribunal held that no time limit could be imposed for such recredit merely because the original invoices were old.

Conclusion: The recredit was held not to be time-barred, in favour of the assessee.

Final Conclusion: The denial of credit and recredit was unsustainable, and the impugned order was set aside with consequential relief.

Ratio Decidendi: Where credit is substantively admissible on the governing law and the reversal was made under protest with liberty to recredit, recredit cannot be defeated by a limitation objection based only on the age of the original invoices.

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