22 October 2009

Case Law on Delay in taking Cenvat Credit

Cenvat Credit cannot be denied just making delay in taking the credit

Tribunal in a recent case held that though Rule has it that    credit should be taken immediately no outside limit was prescribed and therefore credit cannot be denied even if the credit is taken after a long period .  Facts of the case was that CENVAT credit of Rs.1,65,089/- has been disallowed to the assessees, who are manufacturers of handmade branded biris, on the ground that credit was taken on invoices which did not contain details of payment of duty and that the credit in respect of inputs was not taken immediately on receipt of inputs in their factory and penalty of Rs.10,000/- was also imposed by the adjudicating authority (Assistant Commissioner). The above order was appealed against before the Commissioner (Appeals) who disallowed the credit only on the ground of delay in taking credit, and no finding was recorded on the second ground for denial namely that the documents on which credit was taken did not contain the details of payment of duty.

Court had relied on the  decisions of the Tribunal in Coromandel Fertilizers Ltd. Vs. CCE 2009 (239) ELT 99 and Shyam Forgings Vs. CCE 2008 (221) ELT 309 holding that although the rule as it stood prescribed that credit should be taken immediately no outside limit was prescribe and therefore credit cannot be denied even if the credit is taken after a long period

M/s. A. Habeebur Rahman Sons Appellants .Vs. CCE, Chennai Respondent Date of Decision: 07.10.2009



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