2026-VIL-1469-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Admissibility of credit on inputs procured from units availing area-based exemption - Rule 12 of the CENVAT Credit Rules, 2004 - Notification No. 01/2010 dated 06.02.2010 - Period prior to amendment effective 20.01.2014 - Appellant manufacturer availed CENVAT credit on inputs procured from units situated in Jammu and Kashmir which were availing area-based exemption under Notification 01/2010, during the period 01.08.2012 to 19.01.2014 - Credit was disallowed by lower authorities on the ground that such credit was not admissible prior to the amendment in Rule 12 effective 20.01.2014 - Whether CENVAT credit on inputs procured from manufacturers availing exemption under Notification No. 01/2010 was admissible before the formal amendment to Rule 12 of the CENVAT Credit Rules, 2004 – HELD - The scheme of CENVAT credit is to be read in a harmonious manner and not in isolation. CENVAT credit is admissible to a manufacturer or service provider when the conditions prescribed in the CENVAT Credit Rules are satisfied, namely the input has suffered duty, the input is used in manufacture of final product or provision of output service, and credit is received under the cover of prescribed invoice or document - In the present case, all these conditions were satisfied by the Appellant. There was no express prohibition in the CENVAT Credit Rules prior to the amendment to Rule 12 preventing credit on inputs from exempted units - The amendment to Rule 12 effective 20.01.2014 providing express permission for such credit cannot be construed to mean that credit was only admissible from that date. The fact that permission was formally inserted at a later date does not negate the availability of credit when the conditions for credit were satisfied and no express prohibition existed - The appeal is allowed and the credit is admissible to the appellant
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