Heavy Vehicles Factory Vs Commissioner of GST & CE (CESTAT Chennai)
provisions of Rule 4 are very clear as regards the time limit for availment of Cenvat credit. We find that the provisions of Rules cannot be read in isolation. The entire set of Rules covering availment/utilization of credit i.e., CCR, 2004, has to be read in a holistic manner and interpreted in a harmonious manner. We also find that the non obstante clause in Rule 3 (2) is not with reference to the entire Cenvat Credit Rules but, with respect to sub-rule 1 of Rule 3 alone. It means to say that the provisions of other Rules will have to be followed and the only relaxation given is with respect to availment of credit in transition from manufacture of exempted goods to manufacture of dutiable goods. We find that Learned Commissioner has rightly observed, in the impugned order, that
“4.5.3. Now taking into consideration the arguments of the assesse with regard to applicability of proviso to Rule 4 (1), I intend to take upon the contextual legal meaning of „Proviso‟. A proviso is a clause which is added to the statute to accept something from enacting clause or to limit its applicability. As such, the function of a proviso is to qualify something or to exclude, something from what is provided in the enactment which, but for proviso, would be within the purview of enactment. A proviso may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable and thus acquire the tenor and colour of the substantive enactment itself.”
Therefore, we are of the concerned opinion that even the transitional credit will be subjected to the provisions of Rule 4 (1) of CCR, 2004. As the position of law is crystal clear, reference to the cases cited by the appellant would be of no avail.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Appellants, M/s. Heavy Vehicles Factory are engaged in the manufacture of battle tank, armoured fighting vehicles, etc., and are availing exemption contained in Notification No. 62/1995-CE dated 16.03.1995. On rescinding of the said Notification, the appellant obtained Central Excise Registration with effect from 01.06.2015 and have availed Cenvat Credit of Rs. 34,72,54,650/- paid on inputs in stock, work in progress and finished goods. A Show Cause Notice was issued and was followed by an Order-in-Original No. 7/2021 dated 27.02.2021, holding that the credit, availed by the appellants, is not admissible to them in terms of proviso to Rule 4 (1) of the Cenvat Credit Rules,2004 (CCR,2004 in short), as the credit can be availed only within one year from the date of invoice. Hence, this appeal.
2.1 Learned Counsel for the appellant submits that as per Rule 4 (1) of CCR, 2004, credit can be availed on receipt of inputs; it has been clarified by CBEC vide F. No. 345/2/2000TRU dated 29.08,2000, in respect of the earlier provisions of Rule 57 AC that
Rule 57AC provides that Cenvat Credit may be taken immediately on receipt of inputs in the factory. Some apprehensions have been expressed that if the Cenvat credit is not taken “immediately” like within 24 hours or so, the field officers may deny the Cenvat credit. The idea is that if the manufacturer desires, he can take the Cenvat credit at the earliest opportunity when the inputs are received in the factory. This, however, does not mean, nor is it even intended that if the manufacturer does not take credit as soon as the inputs are received in the factory, he would be denied the benefit of Cenvat credit. Such an interpretation is not tenable.
2.2. Learned Counsel submits that an outer time limit for availing the credit was introduced in sub-rule (1) and sub-rule (7) of Rule 4 with effect from 01.09.2014; Rule 3 (2) of CCR, 2004, enables a manufacturer to avail credit in respect of inputs lying in stock and contained in work in progress and in finished goods when the final product ceases to be exempted; this provision has been brought into the statute with the intention that the inputs lying in stock would be used for manufacture of final products that will be cleared on payment of duty. He submits that the provision of Rule 3 (2) of CCR, 2004 has a Non-obstante clause and thus takes precedence over other rules; once the provisions of Rule 4 (1) are not applicable for availment of credit under Rule 3 (2), the proviso to Rule 4 (1) is also not applicable. Learned Counsel further submits that wherever the legislature intended to cast the time limit in allowing transitional credit, it is then specifically. He submits that Section 140 (3) of the CGST Act, which allows availment of transitional credit in respect of the erstwhile duties paid on inputs lying in stock, contained in work in progress and in finished goods, which was not entitled under the legacy laws, but entitled under GST law allows such credit only in respect of the purchases made prior to one year from 01.07.2017. He submits that Rule 3 (2) of CCR, 2004, did not prescribe any time limit. The time limit prescribed by way of proviso under Rule 4 (1) would apply to only in cases where the credit has to be availed in regular course; in the instant case, the transitional credit availed upon withdrawal of exemption could not at all have been availed immediately on receipt of inputs; as the goods were exempted at the time of receipt of inputs, credit can be taken only on withdrawal of exemption; hence, the time limit prescribed in proviso to Rule 4 (!) cannot be read into Rule 3 (2).
2.3. Learned Counsel further submits that in the following cases it was held that the time limit of six months (w.e.f. 01.09.2014) and one year (w.e.f. 01.03.2015) is not applicable for the invoices issued prior to 01.09.2014.
1. Sanghvi Marmo Pvt. Ltd. – 2020 (33) GSTL 232 Tri-Del.
2. Neon News Pvt. Ltd. – 2019 (26) GSTL 241 Tri.-All.
3. Ripple Fragrances Exports Pvt. Ltd.-2018 (363) ELT 1062 Tri-Bang.
2.4. Learned Counsel further submits that the issue is also hit by limitation; the appellants have sought permission from the department vide letter dated 29.04.2016 to avail the impugned credit. They have also reflected the credit in their ER-1 returns filed for the month of September, 2016; the show cause notice was issued on 27.06.2019, beyond the permissible period; he submits that the appellant being a company under the Ministry of Defence, no intention to evade payment of duty can be alleged. He relies upon the
Commissioner of CCE, Hyderabad IV Vs. National Remote Sensing Agency – 2021-TIOL-1343-HC-Telangana-ST.
2.5. He also filed a compilation containing copies of judgements in the following cases in support of his arguments.
