2008 (8) TMI 333 - AT - Central Excise

Cenvat period of limitation credit taken after 3 to 7 years after receipt of inputs - The only objection is that whether the credit can be availed, after a lapse of 3 to 7 years of receipts of inputs in the factory. Even though, the rule say that the credit may be taken immediately, it is true that no outer time limit has been prescribed. The Revenue s contention is that within reasonable time, the appellant ought to have availed the credit. - there was sufficient reasons for the appellants for not taking credit during the relevant period in view of the Uncertainty in the matter. When the law is settled on the issue, there is no justification to deny the credit on the ground that it is availed after a long time. In any case, the Cenvat Credit Rules have not prescribed any outer time limit. credit is allowed.

Summary

Issues:
- Eligibility of Cenvat credit on fuel used in manufacturing fertilizers.
- Whether the credit can be availed after a lapse of 3 to 7 years.
- Interpretation of rules regarding the time limit for availing credit.
- Judicial precedent on the time limit for claiming Cenvat credit.

Eligibility of Cenvat Credit:
The appellants received Low Sulphur Heavy Stock (LSHS) as fuel for manufacturing fertilizers but did not take the Cenvat credit for the period from 1-5-2000 to 31-5-2004. The issue arose when they sought to avail the credit after a significant delay. The Commissioner (Appeals) upheld the denial of credit, emphasizing the importance of availing credit within a reasonable time frame. However, the Tribunal noted that the entitlement of credit on the fuel was not disputed, and the only question was whether the credit could be availed after a lapse of 3 to 7 years. The Tribunal highlighted that while rules suggest taking credit immediately, no specific outer time limit was prescribed.

Interpretation of Rules:
The Revenue contended that the appellant should have availed the credit within a reasonable time, although no specific time limit was stipulated. The Tribunal referenced legal precedents to support its stance that unless a specific time limit is prescribed, one should not be implied. It cited the case of CCE, Jaipur v. Raghuvar (India) Ltd., emphasizing that the creation or destruction of rights based on time limits must be explicitly stated in the law. The Tribunal also referred to cases like Bharat Heavy Electricals v. CCE and Steel Authority of India Ltd. v. Commissioner of Central Excise to support the view that in the absence of a specified time limit, credit could be taken even after a considerable period.

Judicial Precedent on Time Limit:
The Tribunal analyzed various judicial decisions to conclude that the denial of credit based on the delay in availing it was unjustified. It highlighted that when the law becomes clear on an issue, there is no basis to deny credit merely due to the timing of its availing. Notably, the Cenvat Credit Rules did not impose any outer time limit for claiming credit. The Tribunal found that the appellants had valid reasons for the delay in availing the credit, considering the uncertainty surrounding the matter. Consequently, the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore underscores the importance of understanding the nuances of time limits for availing Cenvat credit and the significance of legal precedents in determining the eligibility of such credits.