Once Rightly Availed, CENVAT Credit Cannot Be Disallowed Later: CESTAT

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that CENVAT credit, once it has been correctly availed, cannot be disallowed at a later stage. The case involved an assessee who had availed CENVAT credit on input services used for manufacturing dutiable goods. The revenue department later sought to disallow this credit. The tribunal, however, sided with the assessee, stating that there is no provision in the CENVAT Credit Rules that allows for the recovery of credit that was legitimately taken at the time of receipt of the input services. This ruling affirms the principle of finality in the availing of CENVAT credit and provides clarity and protection for manufacturers. It establishes that as long as the credit was validly taken in accordance with the rules in force at that time, it cannot be retroactively challenged or disallowed by the tax authorities, ensuring stability in tax positions for businesses.