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2024 (2) TMI 1016 - AT - Central ExciseCorrectness of erasure of credit already availed by prospective invalidation of eligibility for retention of credit that would subject those services already procured and used in manufacture/rendering of services to the test of eligibility once again - deletion of rule 6(5) of CENVAT Credit Rules, 2004 with effect from 31st March 2011 - whether credit availed legally and validly up to 31st March 2011 is entitled to be carried forward in the books for subsequent utilization even if the enabling provision was erased from the Rules on that day? HELD THAT:- The operation of law by erasure of rule 6(5) of CENVAT Credit Rules, 2004 could not impact the credit taken under rule 3 of CENVAT Credit Rules, 2004, at the time of procurement of the impugned services; nor is that entitlement thereof under challenge in the proceedings initiated by the notice issued to the appellant. Proceeding onward, the operation of erasure of rule 6(5) of CENVAT Credit Rules, 2004 would not impact credit relating to ‘inputs’ or ‘input services’, already consumed and not determined as attributable exclusively to production of exempted goods or exempted services as on date of erasure. The amendment was effected only for withdrawal of the privilege of exclusion from the general provisions of the rule 6 of CENVAT Credit Rules, 2004 that permitted retention of credit even after the factum of utilization in or deployment in exempted goods and exempted services become apparent. Consequently, the operation of rule 6(5) of CENVAT Credit Rules, 2004 did not, or does not, impact taking of credit but is only pertinent to the retention of credit and, being exclusion by special provision, would have to operate only with effect from the date on which such exclusion came into effect. It is in this context that the decision of the Hon’ble Supreme Court in EICHER MOTORS LTD. VERSUS UNION OF INDIA [1999 (1) TMI 34 - SUPREME COURT] in SAMTEL INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2003 (3) TMI 121 - SUPREME COURT] and in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. [1999 (8) TMI 920 - SUPREME COURT] must be seen i.e., non-operation of rule 3 of CENVAT Credit Rules, 2004 both at the threshold and at the time of utilization of the impugned goods/services. It is clear that the ‘vested right’ affirmed by the Hon’ble Supreme Court in re Eicher Motors Ltd clearly applies to the case of the appellant as there is no evidence that the impugned services had been utilized only after 31st March 2011. The continued eligibility for credit cannot be curtailed or impacted - the impugned order does not sustain - appeal is allowed.
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