Delegated rule-making limits in Cenvat credit disputes: ad-interim protection granted while validity of a credit restriction is examined.

Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 was challenged as ultra vires on the ground that Rule 3 governs substantive eligibility for credit, while Rule 9 is limited to documents and accounts and cannot create a new disqualification. The challenge relied on prior authority on the limits of delegated power in imposing credit conditions. On a prima facie view, the court considered the validity question arguable and granted ad-interim protection by restraining coercive action under the impugned order pending further consideration.

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Issues: Whether Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 was liable to be struck down as ultra vires and whether ad-interim protection was warranted pending consideration of the challenge.

Analysis: The petitioner questioned the validity of the impugned restriction on availing Cenvat credit, contending that Rule 3 governs eligibility while Rule 9 deals with documents and accounts, and therefore the delegated rule could not create a disqualification affecting substantive entitlement. The challenge was supported by reliance on prior authority concerning the limits of delegated power in framing credit-related conditions. On this prima facie view, the matter was found to require consideration and interim protection was considered appropriate.

Conclusion: Ad-interim relief was granted restraining coercive action pursuant to the impugned order, and notice was issued.

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