TIME LIMIT FOR CLAIMING CENVAT CREDIT

[Dr. Sanjiv Agarwal]

Time for Claiming Credit

In the present scheme of Cenvat credit rules, although it is mentioned in the Cenvat Credit Rules that assessee can take the credit immediately, but there is no prescribed time limit for the stated time period in Act or Rules.

In Central Bank of India v. CCE and ST, Coimbatore 2012 (9) TMI 820 - CESTAT CHENNAI, it was held that neither Central Excise Act, 1944 nor the Cenvat Credit Rules, 2004 prescribe any period within which credit has to be taken.

There is no law prescribing time limit from the date of receipt of invoice to taking of Credit [All Cargo Global Logistics Ltd. v. CCE, Indore 2012 (10) TMI 183 - CESTAT, NEW DELHI].

In Central Bank of India v. CCE and ST, Coimbatore 2012 (9) TMI 820 - CESTAT CHENNAI, it was held that in Central Excise Act as well as in Cenvat Credit Rules, nowhere any period had been prescribed in which Cenvat credit has to be taken. Though it is mentioned in Cenvat Credit Rules that assessee could take credit 'immediately', but there was no prescribed time-limit for taking credit. Hence, Department's view that credit was to be taken within a period of one year was totally incorrect and unacceptable and so Cenvat credit was to be allowed to the assessee.

In Contour Apparels v. CC, Bangalore 2012 (10) TMI 915 - CESTAT, BANGALORE, it was held that time limit of Section 11B of Central Excise Act, 1944 doesn't apply to grant of refund under rule 5. Hence, the ground on which refund claim was rejected was unsustainable.

Time limit w.e.f. 01.09.2014

Vide Notification No. 21/2014-CE(NT) dated 11.07.2014, after the second proviso in Rule 4(1)of the Cenvat Credit Rules, 2004, the following proviso has been inserted –

"Provided also that the manufacturer or the provider of output service shall not take Cenvat Credit after six months of the date of issue of any of the documents specified in sub rule (1) of rule 9”.

This proviso is effective from 1.09.2014. Earlier, there was no time limit on availment of Cenvat credit. The provisions of Cenvat Credit Rules, 2004 are amended whereby a manufacturer or a service provider shall not take Cenvat credit of inputs, input services after a period of six months from the date of issue of invoice, bill or challan as the case may be. It may be noted that Cenvat credit with respect to invoices/ challans/ bills which are dated prior to 01.09.2014 will also be subject to such time restriction.

For example, Cenvat credit is not yet taken for a bill dated 01.07.2014, such credit can be availed only till 31st December 2014.

There are many instances where assessees are receiving input services but have not taken any registration as they are not engaged in providing any taxable service during that period. In such cases, it may be advisable that the assessee must take registration and file periodical returns wherein credit must be duly availed.