In a recent ruling, the Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) allowed Marico Limited to avail of CENVAT credits citing that denial of credit for invoices issued before Notification No. 21/2014-CE ( NT ) violated Section 38A of Central Excise Act.
Marico Limited (the appellate) manufacturer of “Parachute Advanced” brand hair oil availed CENVAT credit for two invoices dated June/July 2014. A Notification No. 21/2014-CE ( NT ) introduced a six-month limitation period for availing of CENVAT credit from the invoice date, effective September 1, 2014.
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The limitation period was extended to one year by Notification No. 06/2015-CE ( NT ) on March 1, 2015. The appellate availed of CENVAT credit for the two invoices dated June/July 2014 in January 2015, which was objected to by the Department for violating Notification No. 21/2014-CE ( NT ).
The appellate appealed before the Mumbai Bench of CESTAT where the appellate’s counsel argued that Notification No. 21/2014-CE ( NT ) introducing the six-month limit for CENVAT credit should not apply to invoices raised before its introduction on September 1, 2014.
The counsel further argued that Section 38A of the Central Excise Act protects any right, privilege, obligation, or liability existing before the issuance of a new notification. This notification, therefore, should not retroactively affect their rights.
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The department counsel argued that even after the introduction of Notification No. 21/2014-CE ( NT ), the appellate had enough time to avail of the credit within six months.
A single-member bench led by Suvendu Kumar Pati ( Judicial Member ) observed that the appellate took credit on January 31, 2015, which was well within six months of the notification’s effective date of September 1, 2014.
The court noted that denying the appellate’s credit for invoices issued before the effective date of this notification would violate Section 38A of the Central Excise Act, 1944, which protects rights existing before the introduction of new rules
Further, the Tribunal referred to his previous ruling in Hariprabha Chemicals P. Ltd. vs. CCGST, Kolhapur, and concluded that, in the interest of justice, invoices issued before the notification should be treated as having a “deemed date” for availing credit.
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The court ruled that the appellant was entitled to the CENVAT credit on the two invoices in question. The tribunal allowed the appeal in favor of Marico Limited, setting aside the impugned order passed by the Commissioner of CGST & Central Excise (Appeals), Nashik.
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