Rule 4(1) of the Cenvat Credit Rules can’t be used to curtail Assessee’s right to avail Credit while coming out of Exemption Scheme: CESTAT [Read Order]

The Customs Excise and Service Tax Appellate Tribunal (CESTAT), In ‘Sanvaria Tiles Pvt Ltd  & Rajaram Marbles & Granites Pvt.Ltd  v. CEC & CGST ‘ adopted harmonious interpretation of the Cenvat rules and held that the Assessee’s right to avail credit while coming out of exemption under rule 3(2) cannot be curtailed by rule 4(1) of the cenvat credit rules.

The appellants (Assessee) Sanvaria Tiles Pvt Ltd  and Rajaram Marbles&Granites Pvt.Ltd  were engaged in the manufacture of marble slabs out of the imported marble slabs.They were availing the benefit of small scale exemption Notification till February 2015. They crossed the exemption limit of value of clearances in February, 2015 and as such in terms of provisions of rule 3(2) of Cenvat Credit Rules, 2004, they became entitled to avail cenvat credit of duty paid on the inputs lying in stock or in process or in the final product lying in stock. The appellants availed the credit of inpt lying in stock either as such or as contained in the final product on the date of crossing the exemption limit.The credit was availed by them on the basis of bill of entry used to import the raw materials. However the bills of entry were more than six months old by the time the appellants came under the CENVAT scheme.

The Revenue authorities held that the availment of credit under rule 4(1) can be made only within a period of six months from the issuance of documents. Since the bills of entry were more than 6 months old,the appellants were denied the credit.

The Commissioner (appeals) up held the decision. The aggrieved appellants filed an appeal before CESTAT.

The CESTAT observed that the appellants were not in a position to avail the credits immediately upon the receipt of goods or within aperiod of six months from the issuance of bills of entry as they  were working under the small scale exemption notification. The right of the appellant to avail the credit   under rule 3(2) cannot be extinguished by referring the rule under section 4(1).

The CESTAT held that the CENVAT rules should be harmoniously interpreted so as not to render each other ineffective or inapplicable. The substantive right provided under the law cannot be denied by referring to any other provision if such right is otherwise available to the Assessee.