AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 485
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....h goods. In the ER-1 returns for the month of June-2017, it was observed that there was a closing balance of cenvat credit of excise duty and service tax amounting to Rs.9,20,90,073/- and Rs.1,60,14,32,745/- respectively. The respondent carried forwarded the closing balance of all central excise duty of Rs.9,20,90,073/- in the cenvat credit register maintained for central excise and showed it in the return filed for the month of July 2017. As far as service tax credit was concerned, the appellant distributed the closing balance of service tax credit into GST and non-GST product proportionate to their turn over in the first quarter of 2017-2018. The respondent claimed an amount of Rs. 1,57,32,37,759/- as ITC under TRAN-1 filed under GST out of the total service tax credit amounting to Rs.1,60,14,32,745/-. The balance amount of service tax credit amounting to Rs.2,81,94,986/- was transferred as cenvat credit in their Central Excise return. The show cause notice alleged that in terms of Rule 15 of Cenvat Credit Rules, 2017, the respondent should have transferred the entire balance of cenvat credit available on 13.06.2017 in TRAN-1 filed under GST regime and should not have carried for....
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....counsel further argued that phrase "any cenvat credit which is not eligible for such transfer shall not be retained as cenvat credit unless eligible under these rules" occurring in Rule 15(1) of Cenvat Credit Rules, 2017 clearly shows and means that only credit which are not eligible for transfer to GST regimes, cannot be retained under Cenvat Credit Rules, 2017. He pointed out that the interpretation of Revenue that the question of retention of cenvat credit arises only in such cases where cenvat credit is not eligible for transfer ITC is contrary to the plain reading of Rule 15(1) of Cenvat Credit Rules, 2017. 5. We have gone through rival submissions. We find that Rule 3 and Rule 15 of Cenvat Credit Rules, 2017 reads as follows: Ground of appeal page 8/15 "Rule 3. CENVAT credit. - (1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - (a) the duty of excise specified in the Fourth Schedule to the Excise Act, as leviable under the said Act, (b) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001); ....
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....ntire balance into electronic credit ledger as per Chapter XX of Central Goods and Service Tax Act, 2017. 7. A perusal of Chapter XX of Central Goods and Service Tax Act, 2017 shows that section 140 deals with the transitional arrangement for input tax credit. The said rule reads as under: "140. Transitional arrangements for input tax credit.- (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit [of eligible duties]90 carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law [within such time and] 91in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:- (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit ....
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....ve months immediately preceding the appointed day; and (v) the supplier of services is not eligible for any abatement under this Act: Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such manner as may be prescribed. (4) A registered person, who was engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 or provision of taxable as well as exempted services under Chapter V of the Finance Act, 1994, but which are liable to tax under thisAct, shall be entitled to take, in his electronic credit ledger,- (a) the amount of CENVAT credit carried forward in a return furnished under the existing law by him in accordance with the provisions of sub-section (1); and (b) the amount ....
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....or to the appointed day by an Input Service Distributor shall be eligible for distribution as [credit under this Act, within such time and in such manner as may be prescribed, even if]96 the invoices relating to such services are received on or after the appointed day. (8) Where a registered person having centralised registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit carried forward in a return, furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day [within such time and in such manner]97 as may be prescribed: Provided that if the registered person furnishes his return for the period ending with the day immediately preceding the appointed day within three months of the appointed day, such credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier: Provided further that the registered person shall not be allowed to take credit unless....
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....Central Excise Tariff Act, 1985; (vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act,1985; (vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001; and (viii) the service tax leviable under section 66B of the Finance Act, 1994, in respect of inputs and input services received on or after the appointed day. [Explanation 3.-For removal of doubts, it is hereby clarified that the expression "eligible duties and taxes" excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs TariffAct,1975.]" As perusal of above section clearly indicates that there are numerous restrictions of transfer of credit from central excise cenvat credit to GST input tax credit. In these circumstances, it may not be possible in many circumstances to transfer the entire cenvat credit available in cenvat credit Rules, 2004 to the electronic credit register maintained under GST regime. The appellant has worked out a certain proportion and that has been examined by th....