2007 (4) TMI 487 - AT - Central Excise

Summary

Issues:
Interpretation of notification No. 10/2002-CE and subsequent notifications regarding duty rates and conditions for availing benefits, eligibility of Cenvat credit on inputs received before and after the change in notification, and the impact on clearances of finished goods.

Analysis:
The appeal challenged an order upholding the imposition of conditions on availing benefits under notification No. 10/2002-CE for goods falling under Chapter 85 39.10. The appellant had been paying duty at a concessional rate of 8% subject to conditions on Cenvat credit. The subsequent notification in 2003 rescinded the earlier one and removed the condition regarding non-availing of Cenvat credit on inputs and capital goods. The appellant, having taken credit on inputs as of 1-3-03, faced a challenge from the department regarding the timing of input receipt and credit availment, which was upheld by the original authority and Commissioner (Appeals).

The appellant argued that the removal of the condition in the new notification from 1-3-03 should apply to clearances made from that date onwards, allowing the availment of credit on stock of raw materials existing as of 1-3-03. The contention was that the appellant should benefit from the changed notification conditions for all clearances post 1-3-03 without retroactive restrictions. The Departmental Representative supported the previous findings.

The Tribunal considered the submissions and reasoned that if inputs received before 1-3-03 were used for clearances before that date, the conditions of the earlier notification applied. However, if raw materials were received post 1-3-03 and used for manufacturing, the concessional rate and Cenvat credit eligibility should align with the new notification. Notably, any increase in duty rates post 1-3-03 would require payment at the higher rate even for goods manufactured earlier. Given the removal of conditions from 1-3-03, the Tribunal concluded that benefits should extend to all clearances from that date, justifying the credit taken on raw materials stock as appropriate.

In the final decision, the Tribunal set aside the Commissioner (Appeals) order and allowed the appeal with consequential relief, emphasizing the alignment of benefits with the changed notification conditions effective from 1-3-03.