CA Gaurav Agrawal
W.e.f. 01.09.2014, a time limit of six months from the date of the document was introduced to avail CENVAT credit on inputs and input services. This restriction was introduced by inserting 3rd proviso to Rule 4(1) of CCR-2004 vide Notification No. 21/2014 CE NT Dt. 11.07.2014.
Now the moot question is that whether the provision for taking CENVAT credit within one year is applicable on invoices issued w.e.f. 1st March 2015 only or it is also applicable on invoices issued prior to this date?
History: The period of limitation for taking input credit was introduced for the very first time by way of insertion of the second proviso to Rule 57G of the erstwhile Central Excise Rules, 1944 on 29.6.1995.
The Supreme Court in the case of Osram Surya (P) Ltd. – 2002-TIOL-64-SC-CX; [2002 (142) ELT 5 (SC)] dealt with the above proviso. It was held that the proviso is prospective in operation and the time limit of six months for taking input credit will be applicable even in respect of credit accrued prior to 29.6.1995. The reasoning adopted by the Supreme Court was that the condition imposed by the proviso is only procedural in nature and does not take away the substantive right of credit.
Further in the recent judgment passed by Mumbai Tribunal in case of Ashok Leyland Ltd vs. Commissioner of Central Excise, Nagpur (2014 TIOL 2102 CESTAT MUM) it was held that as per Rule 57G of CER, 1944 time limit of six months would be applicable even for the consignment which had arrived before the introduction of the procedural restriction. Rule 57G of CER, 1944 was same as Rule 4(1) and Rule 4(7) of CENVAT credit rules’2004. Rule 57G of CER’ 1944 specifically provided that “no credit under sub-rule (3) shall be taken by the manufacturer unless the inputs are received in the factory under the cover of specified documents.” Further, sub-rule (5) specifically provided that “credit shall not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3).” The Bench adverted to the decision in Osram Surya (P) Ltd. vs. CCE, Indore – 2002-TIOL-64-SC-CX; [2002 (142) ELT 5 (SC)] where the Apex Court observed that the substantive right had not been taken away by the introduction of the proviso to the Rule but a procedural restriction was introduced and which was permissible in law. Inasmuch as the time limit of six months would be applicable even for the consignment which had arrived before the introduction of the said proviso.
Therefore, in view of above judgments, it can be opined, CENVAT Credit in respect of invoices issued prior to 01.03.2015 can be taken now if 1 year has not expired from the date of invoice. In my opinion, if there are invoices dated 02.03.2014 onwards, for which the credit was not availed earlier, now there is a chance to avail such credits within one year from the date of such invoices. For example, if any invoice is dated 01.12.2014, for which credit was not availed earlier, such credit can be taken before 01.12.2015 and so on.
(Author is a Service Tax Consultant and can be reached at firstname.lastname@example.org, Mob: +91 9911224940)