Tribunal overturns denial of cenvat credit pre-amendment, allowing adjustment against final product

The Tribunal allowed the appeal, overturning the Commissioner (Appeals)'s decision to deny cenvat credit under Rule 4 of Cenvat Credit Rules 2004 for invoices raised before the amendment date. The Tribunal held that the notification should only apply to invoices raised after the amendment date, allowing the appellant to adjust the credit against their final product. The decision was pronounced on 14.08.2018, setting aside the Commissioner (Appeals)'s order dated 16.01.2018.

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Issues: Denial of cenvat credit under Rule 4 of Cenvat Credit Rules 2004 for invoices raised before amendment date.

Analysis:
1. The case involves challenging the denial of cenvat credit amounting to Rs. 16,84,841/- on a single day on 30.09.2014 against invoices raised between 05.09.2010 and 22.08.2013, after the insertion of the 6th proviso in Rule 4 of Cenvat Credit Rules 2004 on 01.09.2014 disallowing credit after 6 months from the date of issue of specified documents. The denial was upheld by the Commissioner (Appeals-I), leading to the appeal.

2. The appellant had been availing cenvat credit of capital goods and input services without any restrictions before 01.09.2014. However, the amendment introduced a time limit for availing such credit. The appellant took credit against past invoices on 30.09.2014, which was later questioned by the assessing officer, leading to a duty demand, interest, and penalty. The appellant argued that the notification should only apply to invoices raised after the amendment date and that there was no malafide intent in availing the credit against past invoices.

3. During the appeal, the appellant cited judicial precedents to support their argument that the notification should have prospective effect and that credit cannot be denied on goods received against duty-paying documents before the issuance of such notification. The appellant emphasized that the credit was utilized immediately after the notification due to contingencies related to discharging central excise duty, urging leniency in considering their case.

4. The department argued that the amended proviso was effective from 01.09.2014, giving a breathing period of one month and two weeks for adjusting credit against previous documents, which the appellant did not utilize. Citing relevant decisions, the department supported the order passed by the Commissioner (Appeals) denying further benefits to the appellant.

5. After hearing both sides and reviewing the case records, the Tribunal observed that the proviso's application was limited, with no clarification from the department regarding its application to invoices raised before the amendment date. The Tribunal noted that a circular exempting the period of limitation under certain conditions was unrelated to the issue at hand. Relying on judicial precedents, the Tribunal concluded that the notification should apply to invoices raised after the amendment date and that the appellant, having availed the credit in the same month the proviso came into force, was entitled to adjust the credit against their final product. Consequently, the appeal was allowed, setting aside the order of the Commissioner (Appeals).

6. The Tribunal pronounced the decision on 14.08.2018, allowing the appeal and overturning the order of the Commissioner (Appeals) dated 16.01.2018.

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