2020 (1) TMI 1617 - AT - Central Excise

Tribunal Grants Cenvat Credit Appeal, Upholds Precedents

The Tribunal allowed the appeal filed by M/s Alidhara Textool Engineers Pvt. Ltd. regarding the denial of Cenvat Credit on capital goods. The denial based ... Non retrospectivity of statutory amendments - Right to Cenvat credit accrues on payment/receipt of inputs - Vested right to input credit cannot be taken away by a later limitation - Prohibition on retrospective operation of a provision introduced for the first timeNon retrospectivity of statutory amendments - Right to Cenvat credit accrues on payment/receipt of inputs - Whether Cenvat credit in respect of invoices issued April to June, 2014 could be denied on the ground that the credit was availed after six months of invoice issue following an amendment introduced on 01/09/2014. - HELD THAT: - The Tribunal held that the amendment prescribing a six month time limit for availing Cenvat credit, introduced on 01/09/2014, cannot be given retrospective effect to deprive a taxpayer of credit accruing prior to that amendment. The reasoning, adopted from the decision of the High Court of Delhi in Global Ceramics Pvt. Ltd., rests on the principle that the right to adjust tax (Cenvat credit) accrues when tax on inputs is paid or when inputs are received and, once vested, such right cannot be extinguished by a subsequently enacted limitation unless the statute clearly requires retrospective operation. The Tribunal noted precedents cited in Global Ceramics (including principles from Eicher Motors, Jayam & Co., and Samtel India) that a provision introduced for the first time is prima facie prospective and limitation rules cannot ordinarily be applied to transactions completed before the amendment. Applying that principle, credit relating to imports and deemed manufacture occurring prior to the amendment must be permitted.Appeal allowed; Cenvat credit in respect of invoices issued April-June 2014 cannot be denied on the basis of the six month limitation introduced on 01/09/2014.Final Conclusion: The amendment introducing the six month time limit for availing Cenvat credit is prospective and cannot operate to deny credit that vested before 01/09/2014; the appeal is allowed and the credit must be permitted. Issues: Appeal against denial of Cenvat Credit on capital goods.Analysis:1. Issue of denial of Cenvat Credit: The appellant, M/s Alidhara Textool Engineers Pvt. Ltd., filed an appeal against the denial of Cenvat Credit on capital goods. The denial was based on the grounds that the credit was availed after six months of the date of issue of the invoice. However, the appellant argued that the invoices were issued before the amendment prescribing the time limit for availing credit within six months. The appellant relied on the decision of the Hon'ble High Court of Delhi in the case of Global Ceramics Pvt. Ltd., where it was held that credit cannot be denied for invoices issued prior to the introduction of the time limit for availing Cenvat Credit. The appellant's argument was accepted, and the Tribunal found that the issue was squarely covered by the decision of the High Court of Delhi. The Tribunal emphasized that the right to adjustment of tax on final products accrues to an Assessee on the date when they paid the tax on the raw materials, and this right continues until the facility available thereto gets worked out.2. Retrospective effect of the amendment: The Tribunal further discussed the retrospective effect of the amendment to Rule 4(1) CCRs prescribing a time limit for claiming Cenvat Credit. Citing various legal precedents, including the decision in Jayam & Co. v. Assistant Commissioner and Samtel India Ltd. v. CCE, Jaipur, it was established that a provision introduced for the first time cannot be given retrospective effect. The Gujarat High Court's decision in Filco Trade Centre Pvt. Ltd. v. Union of India was also referenced to emphasize that the benefit of credit of eligible duties on purchases made under the existing CENVAT credit rules was a vested right that could not be taken away with retrospective effect. Therefore, in the present case, the Tribunal concluded that the amendment prescribing a time limit for claiming Cenvat Credit would not apply to consignments where the import took place before the amendment was introduced.3. Decision and Conclusion: Relying on the legal principles and precedents discussed, the Tribunal allowed the appeal, stating that the denial of Cenvat Credit on the basis of the time limit for availing credit was not applicable to the appellant's case. The judgment highlighted the importance of respecting vested rights and the principle that amendments should not be given retrospective effect to take away existing rights or impose new liabilities. The decision was in favor of the appellant, M/s Alidhara Textool Engineers Pvt. Ltd., and the appeal was allowed based on the legal analysis and precedents presented during the proceedings.