The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the eligibility of CENVAT credit of Excise Duty of any service received shall be governed by law existing at the time of service receipt. Intas Pharmaceuticals Limited, the appellant assessee engaged in the manufacture of dutiable as well as exempted medicaments and availing CENVAT credit, and hence they had opted for following the scheme envisaged under Rule 6 (3A) of the CENVAT credit rules (CCR), 2004.
In the financial year 2011-12, the assessee reversed the CENVAT credit monthly proportionately under Rule 6(3A) of CCR at the end of the financial year 2011-12. The assessee appealed against the order passed by the Commissioner (Appeals) for confirming Rs. 51,74,729/- as CENVAT credit short-paid/reversed, since the amount of Rs. 1,58,66,384/- was not included by the assessee at the time of quantification of the amount to be reversed and for confirming the levy of interest and imposed a penalty of Rs. 13, 00,000/- under Rule 15 of the CENVAT Credit Rules. Hardik Modh, the counsel for the assessee contended that all the services specified in Rule 6 (5) of CCR for which CENVAT credit of Rs. 1,58,66,384/- was availed and received before the omission of Rule 6 (5) of CCR i.e. before 01.04.2011.
Also submitted that it was a settled law that the eligibility of CENVAT credit concerning any service received shall be governed by the law existing at the time of receipt of the services. P. Ganesan, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was wrongly availed the CENVAT credit and the demand raised by the revenue was as per the law and liable to be sustained.
The Bench observed that in the case of Spenta International Ltd, the court held that the eligibility of the CENVAT credit had to be considered as on the date of receipt of the services for the reason that the moment assessee received the service along with invoices on that date the CENVAT credit stand accrued to the assessee.
The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) held that the eligibility of the credit to be considered as on the date of receipt of service but in the present case the Adjudicating Authority had not examined the actual date of receipt of service.