2025 (4) TMI 67 - AT - Service Tax

Irregular availment and utilization of irregular input service credit beyond the period of one year as prescribed under N/N. 21/2014-CE(NT) dated 11.07.2014 for the prior to 11.07.2014 - HELD THAT - Admittedly prior to 11.07.2014 there was no time limit prescribed under Cenvat Credit Rules 2004. The availment of cenvat credit on input or input services under N/N. 21/2014-CE(NT) dated 11.07.2014 is prospective notice. In that circumstances the time limit as prescribed under the said Notification is applicable for the procurement of input/input services after 11.07.2014 not for the period of procurement of input or input services prior to the said date and the ld.Commissioner (Appeals) has done so. Therefore the observations made by the ld.Commissioner (Appeals) in the impugned order agreed upon. There are merit in the appeals filed by the Revenue accordingly the same are dismissed by upholding the impugned order.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment was whether the respondents were entitled to avail CENVAT credit beyond the period of one year as prescribed under Notification No. 21/2014-CE(NT) dated 11.07.2014, particularly for inputs or input services procured prior to the issuance of this notification.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around the CENVAT Credit Rules, 2004, and Notification No. 21/2014-CE(NT) dated 11.07.2014, which introduced a time limit of one year for availing CENVAT credit on inputs or input services. Prior to this notification, there was no such time limit prescribed under the CENVAT Credit Rules, 2004.

Court's Interpretation and Reasoning

The Tribunal interpreted the notification as being prospective in nature. This means that the one-year time limit for availing CENVAT credit, as introduced by the notification, applies only to inputs or input services received after 11.07.2014. The Tribunal agreed with the Commissioner (Appeals) that for inputs or input services procured prior to this date, the absence of a time limit under the earlier rules meant that the respondents were not restricted by the one-year limitation.

Key Evidence and Findings

The Tribunal noted that the respondents had availed CENVAT credit beyond the one-year period post the notification date. However, it was crucial to establish whether this availing pertained to inputs or input services received before or after 11.07.2014. The findings confirmed that the credit in question related to services procured prior to the notification's effective date.

Application of Law to Facts

The Tribunal applied the prospective nature of the notification to the facts, concluding that the respondents' availing of CENVAT credit for services received before 11.07.2014 was not bound by the one-year time limit. Therefore, the action taken by the Commissioner (Appeals) to drop the proceedings was appropriate.

Treatment of Competing Arguments

The Revenue argued that the respondents were not entitled to take CENVAT credit beyond the one-year period as per the notification. On the other hand, the respondents contended that there was no time limit for availing credit on services received prior to the notification. The Tribunal sided with the respondents, emphasizing the prospective application of the notification.

Conclusions

The Tribunal concluded that the respondents were entitled to avail CENVAT credit on input services received before 11.07.2014 without being subject to the one-year limitation introduced by the notification.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Tribunal stated, "The availment of cenvat credit on input or input services under Notification No. 21/2014-CE(NT) dated 11.07.2014, is prospective notice. In that circumstances, the time limit as prescribed under the said Notification is applicable for the procurement of input/input services after 11.07.2014, not for the period of procurement of input or input services prior to the said date."

Core Principles Established

The core principle established is the prospective application of legal notifications unless explicitly stated otherwise. This principle ensures that any new limitations or requirements introduced by a notification apply only to future transactions and not retroactively.

Final Determinations on Each Issue

The Tribunal upheld the decision of the Commissioner (Appeals) to drop the proceedings against the respondents, thereby dismissing the appeals filed by the Revenue. The Tribunal found no merit in the Revenue's arguments, affirming that the respondents were not bound by the one-year limitation for services received before the notification's effective date.