Revenue loses appeal as manufacturer gets CENVAT credit on transition stock used in GST manufacturing

CESTAT Ahmedabad dismissed Revenue's appeal regarding CENVAT credit claims. The respondent successfully claimed credit on inputs lying in stock as of 30.06.2017, which were subsequently used in manufacturing goods cleared under GST post-transition. The tribunal held that inputs not used in manufacturing goods cleared under exemption notification 30/2004-CE cannot be denied credit. For capital goods, though credit availment was deferred for two years due to exemption notification usage, the restriction ended when the notification was rescinded on 30.06.2017, making the respondent immediately eligible for credit on capital goods used in non-exempted goods manufacturing.

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Issues involved:
1. Admissibility of cenvat credit on inputs used in the manufacture of finished goods post-GST implementation.
2. Admissibility of cenvat credit on capital goods under Rule 6(4) of CCR, 2004 after the rescission of an exemption notification.

Analysis:
1. The appeal concerned the admissibility of cenvat credit on inputs and capital goods. The Revenue contended that the credit was not available due to the exemption Notification No. 30/2004-CE. However, the Respondent argued that the credits were valid as they were used for goods cleared post-GST implementation and not under the said notification. The Tribunal found that the inputs claimed for credit were not used in goods cleared under the exempted notification, thus allowing the credit as per the conditions of the notification.

2. Regarding the cenvat credit on capital goods, the Revenue argued against its admissibility under Rule 6(4) of CCR, 2004, due to the exemption notification. The Respondent claimed the credit was valid as the exemption was rescinded, making them eligible for the credit. The Tribunal concurred, stating that the Respondent could claim the credit post-exemption rescission, as the goods were now taxable under GST. The Tribunal upheld the Commissioner's decision, allowing the cenvat credit on both inputs and capital goods.

3. The Tribunal emphasized that the Respondent became entitled to the cenvat credit on capital goods after the exemption rescission, as per Rule 6(4) of CCR, 2004. The judgment highlighted the distinction between goods cleared under the exemption notification and those post-GST implementation, affirming the Respondent's right to claim the cenvat credit. The Tribunal dismissed the Revenue's appeal, upholding the impugned order and allowing the cenvat credit on both inputs and capital goods.

4. The judgment was pronounced on 26.06.2024 by the Appellate Tribunal CESTAT AHMEDABAD, with detailed analysis and legal reasoning provided for the admissibility of cenvat credit on inputs and capital goods post-GST implementation and exemption rescission. The Respondent's entitlement to the credit was affirmed based on the specific circumstances and legal provisions governing cenvat credit eligibility in the given scenario.

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