Credit of items continued to be covered under excise law is not admissible in GST law

C.C.E. & S.T. Vs Oil And Natural Gas Corporation Limited (CESTAT Ahmedabad)

Held that the credit which is admissible as input tax credit under the CGST Act can be availed as input tax credit. The quantum of credit which relates to the items which continued to be covered under the Central Excise Act would not be admissible as input tax credit under CGST Act.

Facts-

The respondent are engaged in manufacture of different petroleum products. After implementation of GST, w.e.f. 01.07.2017, most of the products of assessee are covered under GST Act except for HSD and ATF which continue to be covered under Central Excise Act. The appellant continued to file ER-1 returns in respect of such goods. In the ER-1 returns for the month of June-2017, it was observed that there was a closing balance of cenvat credit of excise duty and service tax amounting to Rs.9,20,90,073/- and Rs.1,60,14,32,745/- respectively. The respondent carried forwarded the closing balance of all central excise duty of Rs.9,20,90,073/- in the cenvat credit register maintained for central excise and showed it in the return filed for the month of July 2017. As far as service tax credit was concerned, the appellant distributed the closing balance of service tax credit into GST and non-GST product proportionate to their turn over in the first quarter of 2017-2018. The respondent claimed an amount of Rs. 1,57,32,37,759/- as ITC under TRAN-1 filed under GST out of the total service tax credit amounting to Rs.1,60,14,32,745/-. The balance amount of service tax credit amounting to Rs.2,81,94,986/- was transferred as cenvat credit in their Central Excise return. The show cause notice alleged that in terms of Rule 15 of Cenvat Credit Rules, 2017, the respondent should have transferred the entire balance of cenvat credit available on 13.06.2017 in TRAN-1 filed under GST regime and should not have carried forward any amount into cenvat credit register maintained for central Excise purpose. The notice sought to deny the total cenvat credit of Rs. 12,02,85,059/- (Service Tax of Rs.2,81,94,986 and Central Excise duty of Rs. 9,20,90,073/-) into cenvat credit account maintained for the purpose of central excise duty on or after 01.07.2017.

Conclusion-

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