2024 (11) TMI 611 - AT - Central Excise

Tribunal Remands Case for Reevaluation on Cenvat Credit Rules, Emphasizes Non-Retroactivity of 2014 Amendment.

The tribunal set aside the impugned order and remanded the case to the adjudicating authority for reevaluation. It recognized the appellant's contention ... CENVAT Credit on outward transportation when the sale of excisable goods is on FOR basis - denial of credit availed on the strength of the invoices after 6 months/ 1 year from the date of invoices, in terms of Rule 4(1) of Cenvat Credit Rules, 2004. CENVAT Credit on outward transportation when the sale of excisable goods is on FOR basis - HELD THAT:- Certain facts needs to be ascertained in order to allow the Cenvat Credit as prescribed under Board Circular No.1065/4/2018-CX dated 08.06.2018. Though, the appellant have vehemently submitted that the sale is on FOR basis and the price of goods is inclusive of excise duty, the same needs to be verified. The adjudicating authority has heavily relied upon the Hon’ble Supreme Court judgment in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT]. However, after considering the said judgment, this Tribunal in the case of Ultratech Cement Limited itself has allowed the Cenvat Credit which was upheld by the Hon’ble High Court of Gujarat in the judgment [2020 (3) TMI 1206 - GUJARAT HIGH COURT]. However, this subsequent development has not come in the light of the learned adjudicating authority. Therefore, the overall matter after considering the subsequent development and verification of facts needs to be reconsidered. Denial of credit availed on the strength of the invoices after 6 months/ 1 year from the date of invoices, in terms of Rule 4(1) of Cenvat Credit Rules, 2004 - HELD THAT:- The facts of date of invoices availment of the Cenvat Credit, the amended provision of Rule 4 of Cenvat Credit Rules needs to be verified and the judgment relied upon by the appellant which prima facie covers the issue herein also to be considered. The impugned order set aside - appeal allowed by way of remand. Issues:1. Entitlement to Cenvat Credit on outward transportation for excisable goods sold on FOR basis.2. Denial of Cenvat Credit availed on invoices after 6 months/1 year from the date of invoices.Analysis:Issue 1: Entitlement to Cenvat Credit on outward transportation:The appellant contended that they are entitled to Cenvat Credit on outward transportation based on previous tribunal decisions and High Court rulings. They relied on cases such as Ultratech Cement Limited, Sanghi Industries Ltd., Vardhman Plasto chem Pvt. Ltd, Schaeffler India Ltd, and Prestress Wire Industries to support their claim. The appellant argued that the limitation of 6 months/1 year for availing Cenvat Credit cannot be applied retrospectively to invoices issued before the amendment in Rule 4 of Cenvat Credit Rules, 2004. The learned counsel highlighted that all invoices for which Cenvat Credit was claimed were issued prior to the rule change. The tribunal noted the need to verify if the sale was indeed on FOR basis and inclusive of excise duty, as per Board Circular No.1065/4/2018-CX. Despite the adjudicating authority's reliance on a Supreme Court judgment, subsequent tribunal decisions favored allowing the Cenvat Credit, as upheld by the High Court of Gujarat. The tribunal concluded that a reevaluation considering these developments and verifying facts was necessary.Issue 2: Denial of Cenvat Credit after 6 months/1 year from invoice date:Regarding the denial of Cenvat Credit for invoices claimed after 6 months/1 year from the invoice date, the appellant argued that the rule amendment in 2014 imposing this limitation cannot be applied retroactively to invoices issued before the change. They cited cases like Essel Proback Ltd., Alok Master Batches Pvt. Ltd., Industrial Cables, Ram Sawrup Electricals Ltd., Indian Potash Ltd., and Voss Exotech Automotive P. ltd. to support their position. The tribunal found merit in the appellant's argument, acknowledging that the limitation should not apply to invoices issued before the rule amendment. However, a thorough verification of invoice dates, credit availment dates, and the amended provisions of Rule 4 of Cenvat Credit Rules was deemed necessary. The tribunal decided to remand the case to the adjudicating authority for a fresh order, considering the observations made.In conclusion, the tribunal set aside the impugned order and remanded the appeals for reconsideration by the adjudicating authority in light of the discussed issues and legal precedents cited by the appellant.