Prospective amendment to CENVAT credit rules limits retrospective reversal, while input timing must still be verified.

The amendment to Rule 11(3) of the CENVAT Credit Rules, 2004, inserted by Notification No. 10/2007-Central Excise (N.T.) with effect from 01.03.2007, was treated as prospective only and not retrospectively applicable to inputs received before that date. As a result, CENVAT credit attributable to the pre-amendment period could not be denied merely by applying the amended requirement backward. The dispute nevertheless required factual verification of whether the relevant inputs had been procured and utilised before or after 01.03.2007, so the credit liability depended on those findings.

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Issues: Whether the amendment to Rule 11(3) of the CENVAT Credit Rules, 2004, introduced with effect from 01.03.2007, operated prospectively so as to exempt the assessee from reversing CENVAT credit on inputs received before that date.

Analysis: The legal position on the reach of the amended rule was treated as settled by the cited High Court decision, which held that the amendment brought in by Notification No. 10/2007-Central Excise (N.T.) dated 01.03.2007 was prospective and applied only from 01.03.2007. On that basis, credit attributable to inputs falling within the pre-amendment period could not be denied merely by applying the amended requirement retrospectively. However, the factual question whether the inputs in dispute had been procured and utilized before or after 01.03.2007 required verification at the adjudication stage.

Conclusion: The amendment was held to be prospective, but the dispute was remanded for fresh determination of the relevant factual position before deciding the credit liability.

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