Dear all,
Our Company in engaged in Cement manufacturing. It has set up a new cement plant. The construction of plant started in 2005-06 and came into operation only in 2009. During this construction period various Capital goods (as defined in Cenvat Credit Rules as amended) were purchased. Excise Registration was taken in November 2009. During a Departmental Audit by Excise Department, the audit team has objected on Credit availed by the unit on Capital goods (referred above) that were received before Central Excise Registration.
Some other points are to be considered:
1. We are not claiming Value based exemption.
2. We are paying duty from the very first removal.
3. We have availed Credit on eligible Capital goods only.
4. We applied for Excise registration before first removal.
My opinion is that we were required to get Excise registration only on manufacture of exciseable goods and as per Rule 3 (1) of Cenvat Credit Rules we are allowed to take credit of Duty paid on capital goods received in the factory of manufacture on or after September 10, 2004. Moreover Act or Rules do not specifically require registration before receipt of capital goods to be eligible for Cenvat credit on the same as per my knowledge.
There are several Tribunal decisions that allow such credit, but most relate to assessee claiming value based exemption. This is not the case with us.
Please suggest whether Departments demand for reversal of credit is valid. Please quote relevant Rules or cases so that we can reply Department's demand.
Thanks in advance.
CAclubindia
