Case Law Details
Tamil Nadu Newsprint and Papers Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
The appeal before the Customs, Excise and Service Tax Appellate Tribunal, Chennai was filed by a paper manufacturing company against Order-in-Appeal dated 13 December 2017 passed by the Commissioner (Appeals), Tiruchirappalli, which had upheld the adjudication order disallowing CENVAT credit and confirming recovery with interest and penalty.
The appellant is engaged in the manufacture of printing and writing paper under Chapter 48 of the Central Excise Tariff Act, 1985 and was registered with the Central Excise Department. It was availing CENVAT credit on inputs, capital goods and input services under the CENVAT Credit Rules, 2004.
During departmental audit, it was noticed that the appellant had availed CENVAT credit amounting to ₹42,76,051 during January and February 2015 on the basis of four invoices or bills of entry that had been issued prior to 1 September 2014. According to the department, the credit had been availed beyond six months from the date of the invoices. The department alleged that this contravened the proviso to Rule 4(7) of the CENVAT Credit Rules, inserted through Notification No. 21/2014-CE (NT) dated 11.07.2014. with effect from 1 September 2014, which introduced a time limit of six months for availing credit.
A show cause notice dated 20 January 2016 was issued proposing disallowance and recovery of the credit under Rule 14 of the CENVAT Credit Rules read with Section 11A of the Central Excise Act, 1944 along with interest and penalty under Rule 15(1) of the CENVAT Credit Rules. The adjudicating authority disallowed the credit, ordered recovery with interest and imposed an equivalent penalty. The Commissioner (Appeals) rejected the appellant’s appeal and upheld the order.
The appellant challenged the decision before the Tribunal. The appellant argued that the invoices or bills of entry on which credit was availed had been issued before 1 September 2014, when the six-month limitation was introduced. At the time the invoices were issued, there was no statutory time limit for availing CENVAT credit. It was contended that the right to avail CENVAT credit is a substantive right that accrues when inputs or services are received and duty or tax is paid. According to the appellant, such a vested right cannot be curtailed by a subsequent procedural amendment unless the amendment expressly provides retrospective application.
The appellant also argued that the time limit prescribed in Rule 4(7) was subsequently amended by e Notification No. 6/2015-Central Excise (N.T.), Dated: March 1, 2015, which extended the limitation period from six months to one year. Since the credit in question had been availed within one year from the date of the invoices, the appellant submitted that the credit was admissible even under the amended rule.
The Tribunal examined the submissions of both sides, the records of the appeal, relevant statutory provisions and judicial precedents cited by the parties. It noted that it was undisputed that all four invoices or bills of entry had been issued before 1 September 2014, which was the date from which the six-month limitation was introduced. The Tribunal observed that before this amendment the CENVAT Credit Rules did not prescribe any time limit for availing credit.
The Tribunal held that the right to CENVAT credit accrues when inputs or services are received and duty or tax is paid, subject to the statutory conditions. Once such a right accrues, it cannot be taken away by a subsequent procedural amendment unless the amendment explicitly provides for retrospective application. The proviso inserted in Rule 4(7) did not contain any indication that it was intended to operate retrospectively.
The Tribunal further observed that the six-month limitation introduced with effect from 1 September 2014 regulates the timing of availment of credit prospectively and cannot be interpreted to retrospectively extinguish rights that had already accrued. It relied on earlier decisions of the Tribunal and judicial authorities which had consistently held that the limitation introduced through Notification No. 21/2014-CE (NT) could not be applied to invoices issued prior to its effective date.
The Tribunal also considered the amendment introduced on 1 March 2015 which extended the time limit for availing credit to one year. It noted that the appellant had availed the credit within one year from the date of the invoices. The Tribunal held that the amendment enlarging the limitation period was beneficial in nature and applied to claims that were still subsisting, particularly where the right to credit had not been extinguished by any statutory provision.
Accordingly, the Tribunal concluded that the six-month limitation introduced with effect from 1 September 2014 could not be applied to invoices issued before that date. It also held that the extension of the limitation period to one year supported the admissibility of the credit, since the appellant had availed the credit within that period.
Having held that the CENVAT credit itself was admissible, the Tribunal observed that the demand for recovery under Rule 14 of the CENVAT Credit Rules could not survive. Consequently, the associated demand for interest and the penalty imposed under Rule 15(1) were also found to be unsustainable.
The Tribunal therefore set aside the Order-in-Appeal dated 13 December 2017 and allowed the appeal with consequential relief in accordance with law.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The present appeal is filed by M/s. Tamil Nadu Newsprint and Papers Limited, Karur (hereinafter referred to as TNPL/ the Appellant), against Order-in-Appeal No. 117/2017-TRY (CEX) dated 13.12.2017 passed by the Commissioner of Central Excise (Appeals), Tiruchirappalli, whereby Order-in-Original No. 02/2017-CX dated 07.04.2017 was upheld.
1.2 The Appellant is engaged in the manufacture of printing and writing paper falling under Chapter 48 of the Central Excise Tariff Act, 1985 and is registered with the Central Excise Department. The Appellant was availing CENVAT credit on inputs, capital goods and input services under the CENVAT Credit Rules, 2004.
1.3 During the audit of accounts it was noticed that the Appellant had availed CENVAT credit amounting to ₹42,76,051/- during January and February 2015 on the basis of four invoices/bills of entry, which were issued prior to 01.09.2014 and beyond six months from the date of availment of credit.
1.4 The Department alleged that the Appellant had contravened the proviso to Rule 4(7) of the CENVAT Credit Rules, 2004 inserted vide Notification No. 21/2014-CE (NT) dated 11.07.2014 (effective from 01.09.2014), which prescribed a time limit of six months for availment of credit.
1.5 A Show Cause Notice dated 20.01.2016 was issued proposing disallowance and recovery of the credit under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944, along with interest and penalty under Rule 15(1) of the CENVAT Credit Rules, 2004.
1.6 The Adjudicating Authority disallowed the credit, ordered recovery with interest, and imposed an equivalent penalty. The Commissioner (Appeals) rejected the Appellant’s appeal.
2. Aggrieved, the Appellant is before this Tribunal.
3. The Ld. Advocate Ms. Uma Maheswari, appeared for the Appellant and Ms. G. Krupa, Ld. Authorized Representative, appeared for the Revenue.
4. The Learned Counsel appearing for the appellant submitted as follows: –
i. The invoices/bills of entry on which credit was availed were issued prior to 01.09.2014, i.e. before the insertion of the six-month limitation. At the time of issuance of these documents, there was no statutory time limit for availing CENVAT credit.
ii. It was contended that the right to CENVAT credit is a substantive right which accrues on receipt of inputs/input services and payment of duty/tax thereon, and such vested right cannot be taken away by a subsequent procedural amendment.
iii. It was further argued that the proviso to Rule 4(7) was amended again videe Notification No. 6/2015-Central Excise (N.T.), Dated: March 1, 2015 extending the time limit from six months to one year, and the credit in question was availed within one year from the date of invoices. Hence, even on that count, the credit was admissible.
iv. The issue is no longer res integra and stands settled by the following decisions: –
a. Nouveau Medicament (P) Ltd. v. CCE, 2018 (10) TMI 694 – CESTAT Chennai
b. Autotech Industries (I) Pvt. Ltd., 2024 (9) TMI 110 – CESTAT Chennai
c. Marico Ltd., 2024 (8) TMI 1204 – CESTAT Mumbai
d. Bostik India Pvt. Ltd., 2025 (3) TMI 188 – CESTAT Bangalore
e. Voss Exotech Automotive Pvt. Ltd., 2018 (363) ELT 1141 – CESTAT Mumbai
f. Suryadev Alloys & Power Pvt. Ltd., 2018 (11) TMI 1019 – CESTAT Chennai
g. Bharat Aluminium Co. Ltd., 2019 (7) TMI 1084 – CESTAT New Delhi
h. Global Ceramics Pvt. Ltd., 2019 (50) TMI 1432 – Delhi High Court
v. It was prayed that the impugned order be set aside in toto with consequential relief.
5. The Ld. Authorized Representative reiterated the findings of the lower authorities and contended that the proviso to Rule 4(7) clearly bars availment of credit beyond six months during the relevant period.
6. We have carefully heard the submissions advanced by both sides, examined the appeal records in detail, considered the statutory provisions, and the case Laws cited.
7. Upon such comprehensive consideration, the following issues arise for our determination in this appeal as to: –
i. Whether six-month limitation introduced under the proviso to Rule 4(7) of the CENVAT Credit Rules, 2004 applies to invoices/bills of entry issued prior to 01.09.2014?
ii. Whether amendment extending the time limit to one-year w.e.f. 01.03.2015 validates credit availed within one year from the date of such invoices? and,
iii. Whether denial of credit along with interest and penalty is sustainable?
Applicability of six-month limitation to pre-01.09.2014 invoices
8.1 It is an admitted and undisputed fact on record that all the four invoices/bills of entry, on the basis of which the impugned CENVAT credit of ₹42,76,051/- was availed, were issued prior to 01.09.2014, which is the effective date of insertion of the proviso to Rule 4(7) of the CENVAT Credit Rules, 2004 byNotification No. 21/2014-CE (NT) dated 11.07.2014.
8.2 It is equally undisputed that, prior to this amendment, the CENVAT Credit Rules, 2004 did not prescribe any time limit whatsoever for availment of credit on inputs or input services.
8.3 The legal position is well settled that the right to avail CENVAT credit is a substantive right under the CENVAT scheme which accrues to the assessee when the inputs/input services are received and duty or service tax thereon is paid, subject only to fulfillment of the conditions prescribed under the statute. Once such a right accrues, it cannot be taken away or curtailed by a subsequent procedural amendment unless the amending provision is expressly retrospective or contains a clear legislative intent to that effect. The proviso to Rule 4(7), as inserted w.e.f. 01.09.2014, does not contain any language indicating retrospective application.
8.4 The proviso to Rule 4(7), as introduced w.e.f. 01.09.2014, merely regulates the timing of availment of credit prospectively and does not extinguish or impair the right that had already accrued prior to its insertion. In the absence of any express language conferring retrospective operation, the proviso cannot be construed so as to divest the appellant of a vested right that had crystallised when no limitation existed.
8.5 This position has been consistently affirmed by judicial fora. The Chennai Bench of the Tribunal in Nouveau Medicament (P) Ltd. v. CCE – 2018 (10) TMI 694 (CESTAT Chennai) held that denial of CENVAT credit merely on the ground that it was availed after six months is unsustainable when the invoices were issued prior to 01.09.2014, as the limitation introduced subsequently cannot operate retrospectively. Similar views were expressed in Voss Exotech Automotive Pvt. Ltd. v. CCE – 2018 (363) E.L.T. 1141 (Tri.-Mumbai) and Suryadev Alloys & Power Pvt. Ltd. v. CCE – 2018 (11) TMI 1019 (CESTAT Chennai), wherein it was categorically held that Notification No. 21/2014-CE (NT) dated 11.07.2014.) cannot be applied to invoices issued prior to its effective date, as such application would amount to impermissible retrospective curtailment of an accrued right.
8.6 The Hon’ble Delhi High Court in Global Ceramics Pvt. Ltd. 2019 (26) G.S.T.L. 470 (Del.) has authoritatively held that in view of Section 38A of the Central Excise Act, 1944, amendments to rules or notifications cannot affect accrued or vested rights unless a contrary intention is expressly provided. In the absence of such express intention, a procedural amendment imposing a time limit cannot be applied retrospectively to deny credit on documents issued prior to the amendment.
8.7 The Revenue’s reliance on decisions upholding the validity of time limits for availment of credit does not advance its case, as those decisions pertained to periods when the limitation was already in force or to invoices issued after the introduction of such limitation. They do not address the factual situation involved in the present case, where the invoices were issued at a time when no limitation existed.
8.8 In view of the above analysis and consistent judicial pronouncements, we hold that the six-month limitation prescribed under the proviso to Rule 4(7) of the CENVAT Credit Rules, 2004, inserted w.e.f. 01.09.2014, cannot be applied to invoices/bills of entry issued prior to that date, as such application would amount to impermissible retrospective curtailment of an accrued right. Accordingly, denial of credit on this ground is legally unsustainable.
Effect of amendment extending the time limit to one year
9.1 We note that the proviso to Rule 4(7) of the CENVAT Credit Rules, 2004 was further amended vide Notification No. 6/2015-CE (NT) dated 01.03.2015, whereby the time limit for availment of CENVAT credit was extended from six months to one year from the date of issue of the specified documents. This amendment was clearly beneficial in nature and intended to mitigate the hardship caused by the earlier restrictive time frame.
9.2 It is an admitted position on record that the impugned CENVAT credit was availed by the appellant within one year from the date of issue of all the four invoices/bills of entry. Therefore, even assuming without admitting that the limitation provision introduced in 2014 was applicable, the availment of credit would still fall within the enlarged time limit prescribed under the amended proviso effective from 01.03.2015.
9.3 The question that arises is whether the benefit of the extended period of one year can be denied on the ground that the earlier six-month period had expired prior to 01.03.2015. It is well settled that a procedural amendment enlarging a period of limitation applies to all subsisting claims, so long as the right itself has not been extinguished by a substantive statutory bar as on the date of such amendment.
9.4 We find that The Hon’ble Supreme Court in Mysore Rolling Mills Pvt. Ltd. v. CCE 1987 (28) ELT 50 (S.C.) held that where a rule extends a time period, such extension necessarily relates back to the extent expressly provided, unless the statute indicates otherwise. Similarly, in Raghuvar (India) Ltd.2000(118) ELT 311 (S.C.), the Apex Court observed that limitation provisions affecting substantive rights must be expressly enacted and cannot be read restrictively so as to destroy accrued benefits.
9.5 We also find that Section 38A of the Central Excise Act, 1944, which saves accrued rights upon amendment or repeal of rules or notifications, squarely applies to the present case. The amendment dated 01.03.2015 does not express any intention to nullify credits availed within one year merely because a shorter period earlier existed. On the contrary, it enlarges the permissible time window, thereby validating credits taken within one year from the date of invoice.
9.6 The consistent view taken by the Tribunal in Autotech Industries (I) Pvt. Ltd.2024(9) TMI 110-CESTAT CHENNAI, Marico Ltd.2024(8) TMI 1204-CESTAT Mumbai, Bostik India Pvt. Ltd. 2025 (3) TMI 188 – CESTAT BANGALORE, and Voss Exotech Automotive Pvt. Ltd. 2018 (3) TMI 1048 – CESTAT MUMBAI is that where invoices were issued prior to or around the introduction of the time-limit provision, and credit was availed within one year, denial of credit is unsustainable. The Chennai Bench has repeatedly held that the amendment extending the time limit is remedial and must be applied in a manner that advances the object of the CENVAT scheme rather than defeats it on technicalities.
9.7 The Revenue’s reliance on the decision of the Hon’ble Supreme Court in Union of India v. Uttam Steel Ltd. is misplaced. That judgment dealt with revival of a claim that had already become time-barred under the unamended statute. In the present case, the credit had not become irreversibly barred by any substantive provision, particularly since the invoices themselves were issued when no limitation existed. Hence, the ratio of Uttam Steel is clearly distinguishable on facts and law.
9.8 In view of the above discussion, we hold that the amendment to Rule 4(7) vide e Notification No. 6/2015-Central Excise (N.T.), Dated: March 1, 2015 extending the time limit to one year enures to the benefit of the appellant, and the CENVAT credit availed within one year from the date of issue of the invoices/bills of entry is legally admissible.
Sustainability of interest and penalty
10. Once the CENVAT credit itself is held to be admissible, the very foundation for recovery under Rule 14 of the CENVAT Credit Rules, 2004 disappears. Consequently, the demand for interest and imposition of penalty under Rule 15(1) are also unsustainable and liable to be set aside.
11. In view of the foregoing discussion, we hold that: –
i. the six-month limitation introduced w.e.f. 01.09.2014 is not applicable to invoices/bills of entry issued prior thereto;
ii. the appellant was legally entitled to avail CENVAT credit of ₹42,76,051/-; and
iii. the denial of credit, recovery thereof along with interest, and imposition of penalty are unsustainable in law.
12. The impugned Order-in-Appeal No. 117/2017-TRY (CEX) dated 13.12.2017 is set aside. The appeal is allowed with consequential relief, if any, in accordance with law.
(Order pronounced in open court on 19.02.2026)
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