Case Law Details
Welspun India Limited Vs Commissioner of CGST & Central Excise (CESTAT Ahmedabad)
Rule 11(3) of Cenvat Credit Rules, 2004 though provides for reversal of unutilized Cenvat credit but the same cannot be applied retrospectively in the absence of specific provision under the statute.
Introduction: This article examines the case of Welspun India Limited vs. Commissioner of CGST & CESTAT Ahmedabad, where the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the reversal of CENVAT credit on the manufacture of Cotton Terry Towels. The case revolved around the non-insertion of Rule 11(3) of CENVAT Credit Rules, 2004, and its retrospective application.
Analysis: Welspun India Limited, engaged in manufacturing Cotton Terry Towels, availed CENVAT credit under the CENVAT Credit Rules, 2004, on the Additional Duty of Excise (Textile & Textile Articles). The Department demanded the reversal of unutilized CENVAT credit based on Rule 11(3) of the rules, which was inserted in 2007. However, the appellant argued that the credit was legally availed before the insertion of the rule and could not be recovered retrospectively. The CESTAT upheld the appellant’s contention, citing precedent cases where the rule was held to be prospective and not applicable to credits earned before 2007.
Conclusion: In a significant ruling, the CESTAT ruled in favor of Welspun India Limited, stating that the CENVAT credit of Additional Duty of Excise (Textile & Textile Articles) cannot be reversed under Rule 11(3) of CENVAT Credit Rules, 2004, as it was earned before the rule’s insertion. This decision sets a precedent clarifying the non-retrospective application of Rule 11(3) and its impact on manufacturers availing CENVAT credit on exempted products.
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