TMI Blog2023 (7) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 4(2)(a) of the Cenvat Credit Rules, 2004 makes it clear that a manufacturer can take credit in the financial in which the capital goods are received for an amount not exceeding 50% of the specified duty paid on the capital goods. The balance credit is permitted to be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of manufacture . There is neither restriction nor compulsion to avail and utilize Cenvat credit on capital goods in the initial year of receipt of capital goods. The Appellant at their discretion may or may not opt for avail and utilize the Cenvat credit on capital goods in the initial year. The contention of the department that the Appellant contravened the provisions of Cenvat credit by not utilizing 50% of the capital goods in the first years of its receipt is misconceived and not tenable in the eyes of law - the Appellant has not violated any provisions of the Cenvat Credit Rules, 2004, by foregoing the credit in the initial years of its receipt and availing the full credit in the subsequent year. There was no violation in the refund sanctioned to the Appellant - the impugned order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Cenvat credit on capital goods was for the month of April, 2007. The due date of filing of monthly Returns and Refund claim for the month of April, 2007 was 7th of May 2007. Had there been any dispute of wrong availment of Cenvat credit, the department should have issued the impugned show cause notice by 7th of May, 2008 whereas, the show cause notice was issued on the appellants on 17th November 2008 after a lapse of one year from the date of submission of first ER-I return and Refund claim under Notification No.32/99-CE dated 08.07.1999. Hence, the impugned order-in-Original dated 31.12.2009 is not sustainable on the ground of limitation and liable to be set aside. 5. On merits of the issue, the Appellant stated that the allegation of wrong availment of Cenvat credit on capital goods in contravention of Rule 4(2)(a) of Cenvat Credit Rules 2004 on the ground of nonavailment and utilization of Cenvat Credit in its initial period is not tenable in the eye of law. The department committed an error in interpreting the provisions of Cenvat Credit Rules, 2004. 6. Reference is made Rule 4(2) which reads as :- RULE 4. Conditions for allowing CENVAT credit. (1) The CENV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and dies and goods falling under [heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804] of the First Schedule to the Excise Tariff Act, are in the possession of the manufacturer of final products, or provider of output service in such subsequent years. Illustration. - A manufacturer received machinery on the 16th day of April, 2002 in his factory. CENVAT of two lakh rupees is paid on this machinery. The manufacturer can take credit up to a maximum of one lakh rupees in the financial year 2002-2003, and the balance in subsequent years. (3) The CENVAT credit in respect of the capital goods shall be allowed to a manufacturer, provider of output service even if the capital goods are acquired by him on lease, hire purchase or loan agreement, from a financing company. (4) The CENVAT credit in respect of capital goods shall not be allowed in respect of that part of the value of capital goods which represents the amount of duty on such capital goods, which the manufacturer or provider of output service claims as depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961). 7. The Appellant stated that a plain reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and strat production No restriction under Rule 4(2)(b) of Cenvat Credit Rules, 2002 regarding unutilized credit Balance credit i.e. entire amount of utilized credit of duty paid on capital goods available in second financial year Rule 4 of Cenvat Credit Rules, 2002/2004 There is a maximum limit of 50%, a manufacturer has the liberty to utilize any amount of credit below that percentage or not avail any credit at all in the first Financial year. 11. The contention of the Appellant is that availment and utilization of Cenvat credit under Cenvat Credit Rules, 2004 is a separate proceedings and claiming refund of the duty paid out of Account Current under Notification No.32/99-CE dated 08.07.1999 as amended is independent. The Appellant submitted that availment and utilization of Cenvat Credit is guided within the frame work of the Cenvat Credit Rules, 2004. The department cannot raise any objection of not utilizing the Cenvat Credit on capital goods which is within the frame work of Cenvat Credit Rules. Accordingly, they prayed that the impugned orderin- original passed by the Ld.Commissioner, Central Excise, Guwahati, has no merit and liable to be set aside. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the appeal records. 17. We observe that the Appellant contested the issue on merits as well as on the ground of limitation. Regarding limitation, the Appellant stated that the dispute of non availment of Cenvat Credit on capital goods was for the month of April, 2007. The due date of filing of monthly Returns and Refund claim for the month of April, 2007 was 7th of May 2007. Had there been any dispute of wrong availment of Cenvat credit, the department should have issued the impugned show cause notice by 7th of May, 2008, whereas, the show cause notice was issued on the appellants on 17th November 2008 after a lapse of more than one year from the date of submission of first ER-I return and Refund claim under Notification No.32/99-CE dated 08.07.1999. Hence, the impugned order-in-Original dated 31.12.2009 is not sustainable on the ground of limitation and liable to be set aside. We agree with the submission of the Appellant. The Notice for normal period should have been issued in this case on or before 07.05.2008, whereas the Notice was issued on 17.11, 2008. Hence, we hold that the demand is not sustainable on the ground of limitation. 18. Regarding merits of the case the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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