Whether Cenvat credit deniable on the ground that it should be taken immediately on receipt of inputs?

PJ/Case Laws/2012-13/1456

Case:-M/S D M EXPORTERS V/S COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Citation:- 2013-TIOL-319-CESTAT-MUM

Brief Facts: - The appellant was having a unit at Dahisar (E) and after sometime the same was shifted to Bhiwandi. The appellant applied for Central Excise Registration for their new premises on 01.07.2004 which was granted on 11.08.2004. During the period, from the day of application for registration and till the registration granted, the goods were stored temporarily at outside factory premises, therefore, CENVAT credit was denied on these inputs on 11.10.2004. The allegation in the show-cause notice is that as per Rule 4 of CENVAT Credit Rules, 2002, CENVAT Credit should be availed immediately on receipt of inputs in the factory of the manufacturer. In as much as they failed to avail CENVAT credit immediately on receipt of the goods, the appellant has contravened the Rule 4 of CENVAT Credit Rules, 2004, therefore they are not entitled to take credit on inputs. The matter was adjudicated and the demand along with interest was confirmed and a penalty was also imposed on the appellant. Aggrieved by the same, the appellant has filed the present appeal.

Respondent’s Contention: - The respondent contended that in this case, the invoice was in the name of the head office and later the same was endorsed in the name of the appellant and this fact was mentioned in the show-cause notice.

Reasoning of Judgment: - The Hon’ble Tribunal held that in the show-cause notice the only allegation against theappellant is that the appellant has contravened the provisions of Rule 4 of CENVAT Credit Rules, 2004. As the appellant had not taken the credit immediately, therefore, the argument advanced by the appellant deserves no merit. Further, there is no bar on the assessee if they have failed to take credit immediately and takes the credit later-on. The only requirement is that the assessee has to take credit on the basis of supporting documents which are not in dispute. The Hon'ble Bombay High Court and this Tribunal, in the following decisions, have held that there is no time limit prescribed in the amended rules:-
(a) Marmagoa Steel Ltd. vs. Union of India - 2005 (192) ELT 82 (Bom.) = (2005-TIOL-239-HC-MUM-CX)
(b) Simplex Mill Co. vs. CCE - 2007 (81) RLT 331 (Bom.) = (2007-TIOL-824-CESTAT-MUM)
(c) DGM Taxation BHEL vs. CCE Delhi - 2007 (211) ELT 135 (Tri. Del)
Therefore, if credit is not taken immediately there is no bar that the assessee cannot take credit in future. Relying on the decisions of the Hon'ble Bombay High Court as well as this Tribunal herein above, it was held that the appellant is rightly taken credit.

Decision: - The appeal was allowed.

Comment:-The substance of this case is that Cenvat credit can be taken anytime except on the basis of valid and proper documents. Rule 4 states that credit can be taken immediately on receipt of inputs in the factory but this does not mean that it has to be mandatorily taken on the receipt itself and it cannot be taken later.

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PJ/Case Laws/2012-13/1456

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