CESTAT allows CENVAT Credit on Issuance of Pre-Amendment Invoices, upholds Six Month Time Limit Rule Cannot be Applied Retrospectively [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal [CESTAT] Chennai Bench held that the six-month period as introduced in the CENVAT Credit Rules 2004, cannot be applicable retrospectively to deny credit on invoices that were issued prior to the amendment.

The appellant Tamil Nadu Newsprint and Papers Limited is involved in the business of manufacturing printing and writing paper and is registered with the CentralExcise Department.

However,during an audit the revenue department found that the assessee had availed CENVAT credit amounting to ₹42.76 lakh in January and February 2015 on the basis of four invoices and bills of entry that were issued prior to 1st September 2014.

Further,the department claimed that the credit had been taken after the period of six months as provided for by the proviso to Rule 4(7) of the CENVAT Credit Rules introduced by Notification No. 21/2014-C.E. (NT) which is effective from 01.09.2014.

Therefore, a notice for recovery of the credit along with interest and penalty was served to the assessee. This demand for recovery of the credit along with interest and penalty was confirmed by the adjudicating authority and then by the Commissioner of Central Excise as a result the assessee approached the Tribunal for relief.

The assessee claimed that the invoices were issued even before the introduction of the limitation of six months. At the time of issuance of the invoices there were no statutory limitations for the taking of the credit.

Further,It was also claimed by the assessee that the right to CENVAT credit is a substantive and vested right and it accrues the moment the inputs or services are received and the duty or tax is paid.

However, the Revenue supported the orders of the lower authority and stated that the limitation period of six months as prescribed by Rule 4(7) denied the availability of credit.

The Tribunal comprising P. Dinesha ( Judicial Member) and Vasa Seshagiri Rao (Technical Member) noted that the invoices were issued prior to the introduction of the limitation period of six months.

Therefore,it held that the introduction of the limitation period regulated the timing of the availment of credit prospectively and could not deny a vested right.Hence it set aside the impugned order and granted consequential relief to the assessee.

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