22 October 2013
The CENVAT Credit Rules 2004 is very clear that an assessee producing exempted goods or providing exempted services cannot avail of input credit for the production of the exempted goods or service. In case of SSI / SSP the eligible input can be availed of, but since there is no output tax the utilization of the same does not arise.
However, in the case of an assessee producing both exempted and taxable goods or services, the assessee is entitled to avail of eligible Input Credit and utilize the same for payment of ST / CE liability.
In October 2012, the Zonal Bench of CESTAT at Bombay held in the case of CCE vs. Jyoti Structurals Limited that there there is no requirement for a one is to one link of Input Credit and output product / service.
To the best of my knowledge and information, the Department has so far not preferred an appeal before the High Court.
This decision effectively means that an assessee can avail of all elgible inputs and utilize the same to pay off CE or ST liability.
There is no time limit for carrying forward availed CENVAT Input Credit as long as the unit is in production or the service continues to be rendered.
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