Order date - 09 September 2022

Facts – 

• The Respondent, OIL AND NATURAL GAS CORPORATION LIMITED, is engaged in manufacture of different petroleum products.
• After implementation of GST, w.e.f. 01.07.2017, most of the products of assessee are covered under GST Act except for High Speed Diesel (HSD) and Aviation Turbine Fuel (ATF) which continue to be covered under Central Excise Act. The appellant continued to file ER-1 returns in respect of such goods. 
• In the ER-1 returns for the month of June-2017, it was observed that there was a closing balance of cenvat credit of excise duty and service tax amounting to Rs.9,20,90,073/- and Rs.1,60,14,32,745/- respectively, which was carry forwarded and the closing balance of all central excise duty of Rs.9,20,90,073/- in the Cenvat credit register maintained for central excise and showed it in the return filed for the month of July 2017.
• The respondent claimed an amount of Rs. 1,57,32,37,759/- as ITC under TRAN-1 filed under GST out of the total service tax credit amounting to Rs.1,60,14,32,745/-. The balance amount of service tax credit amounting to Rs.2,81,94,986/- was transferred as cenvat credit in their Central Excise return.
• The show cause notice was issued alleging that in terms of Rule 15 of Cenvat Credit Rules, 2017, the respondent should have transferred the entire balance of cenvat credit available on 13.06.2017 in TRAN-1 filed under GST regime and should not have carried forward any amount into cenvat credit register maintained for central Excise purpose.
• The Commissioner set aside the Show Cause Notice issued for demand of Cenvat credit and interest.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether the respondent is liable to reverse the Cenvat credit availed and are liable to pay interest?

Order – 

• The Tribunal observed that the Revenue failed to notice that the Rule 3 and Rule 15 of Cenvat Credit Rules, 2017 states that any Cenvat credit which is not eligible for transfer would not be retained as Cenvat credit unless eligible under these Rules, i.e. Cenvat Credit Rules, 2017.
• Also, there are numerous restrictions of transfer of credit from central excise Cenvat credit to GST input tax credit. In these circumstances, it may not be possible to transfer the entire Cenvat credit available in Cenvat credit Rules, 2004 to the electronic credit register maintained under GST regime. 
• It was observed that the appellant has worked out a certain proportion and that has been examined by the Commissioner and found to be proper. The Revenue in its appeal has not pointed out as to why the said apportioning done by Commissioner is incorrect. The appeal simply says that the respondent should have transferred the entire Cenvat credit available under Cenvat Credit Rules, 2004 to the electronic credit register maintained under Central Goods and Service Tax Act, 2017.
• As per first proviso to Section 140(1), only the credit which is admissible as input tax credit under the CGST Act can be availed as input tax credit. The quantum of credit which relates to the items which continued to be covered under the Central Excise Act would not be admissible as input tax credit under CGST Act and therefore, the argument of the Revenue that the Respondent should have transferred the entire credit was found to be incorrect.
• The Appeal of revenue was dismissed.