Admissibility of Cenvat credit taken in November but the goods were received in December.

PJ/Case Laws/2012-13/1119

Case: HOT SPORT COLOUR LAB V/S COMMISSIONER OF CENTRAL EXCISE, INDORE

Citation:2012 (23) S.T.R 336 (TRI. – DELHI)

Issue:- Admissibility of Cenvat credit taken in November but the goods were received in December.

Brief Facts:- The dispute is relating to the availability of CENVAT credit on capital goods purchased by the appellant in the month of December, 2005. Appellants purchased capital goods from the buyers under invoice dated 5-12-2005 and the said capital goods were received in the factory on 22-12-2005 whereas they had taken the credit of duty paid on the capital goods in November, 2005 itself.

Revenue contended that in terms of the provision of Cenvat Credit Rules, 2004 an assessee is entitled to take credit only after receipt of the capital goods. Inasmuch as the appellants availed Cenvat credit before the receipt of the capital goods, the said credit is not admissible to them. Accordingly, the proceedings were initiated against them by way of issuance of show cause notice resulting in confirmation of demand of duty by denying CENVAT credit and imposition of penalty under Rule 15(1) and Rule 15(2) of Cenvat Credit Rules, 2004.

In appeal, the Commissioner (Appeal) held that appellant had taken cenvat credit before they received the goods in their factory, therefore, credit was wrongly taken in the month of November, 2005. It was held that credit will be available only from 22.12.2005 onwards when capital goods along with invoices were received. However, the penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004 was waived on the ground that the credit was not utilized and the penalty under Rule 15(1) of Cenvat Credit Rules, 2004 was reduced to 2 lakhs.

Hence, the matter is before the Tribunal.

Reasoning of Judgment:- The Tribunal held that the order of the Commissioner (Appeal) was contradictory. On one hand it was observed that appellants were entitled to credit after 22-12-2005 when capital goods were received in factory and on the other hand, the Commissioner (Appeal) dismissed the entire credit. It was also observed that appellants have not earned any benefit by availing of credit in the month of November of itself, inasmuch as they were liable to pay service tax by 5^th January, 2006. As such, if credit would have been taken in the month of December, 2005, by itself cannot be made a ground for denial of credit on such technical ground, which is otherwise available to the appellants. The Tribunal held in as much as the appellants were admittedly entitled to credit after 22-12-2005.

It was noted that it is not shown that credit so availed was utilized during November to 22.12. 2005 in which case interest liability would arise. Therefore, matter remanded back to the original Adjudicating Authority for the verification of the above mentioned factual position and to conform interest accordingly.

Decision:- Appeals disposed off.

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PJ/Case Laws/2012-13/1119

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