2009 (1) TMI 624 - AT - Central Excise

Summary

Issues:
1. Eligibility for Cenvat credit post withdrawal of compounded levy scheme.
2. Discrepancy in declared stock of raw material and actual verification results.
3. Time bar for demand of wrongly taken deemed Cenvat credit.
4. Cooperation with Department during verification process.
5. Relevance of stock verification report by Commissioner appointed by Debt Recovery Tribunal.

Analysis:
1. The Appellant, a manufacturer of M.S. Ingots, operated under a compounded levy scheme until 31-3-2000, making them ineligible for Cenvat credit. Post withdrawal of the scheme, they became eligible for input duty credit. The Central Government issued a notification allowing deemed credit up to 30 April 2000. Appellant declared stock of 583.865 M.T. of scrap on 1-4-2000. However, during verification, only about 70 M.T. of non-duty paid scrap was found. The Appellant challenged this, but lack of cooperation during verification raised concerns.

2. The discrepancy between the declared stock of 683.86 M.T. of duty paid raw material and the actual 70 M.T. of non-duty paid scrap found during verification led to a dispute. The Appellant's plea for re-verification was not accepted, and their claim of a higher stock based on a report by the Debt Recovery Tribunal's appointed Commissioner was deemed irrelevant. Lack of cooperation during subsequent proceedings further weakened their case.

3. The show cause notice issued for demand of wrongly taken deemed Cenvat credit amounting to Rs. 4,21,114/- invoked an extended period of five years. The Appellant argued that the demand was time-barred due to no suppression on their part. However, the authorities found discrepancies in the quantity and nature of the stock, justifying the extended period for invoking the demand.

4. The Appellant's refusal to cooperate during stock verification and their failure to provide satisfactory explanations regarding the discrepancy in stock quantities worked against their case. The lack of cooperation with Departmental officers and non-appearance of authorized representatives raised doubts about the accuracy of the declared stock.

5. The stock verification report by the Commissioner appointed by the Debt Recovery Tribunal, indicating a higher stock quantity, was deemed irrelevant for the purpose of deemed credit as it did not align with the findings during the official verification process. The discrepancies highlighted during the proceedings justified the denial of deemed Cenvat credit to the Appellant.

In conclusion, the Tribunal upheld the decision to deny the deemed Cenvat credit to the Appellant due to significant discrepancies in the declared stock and actual verification results, lack of cooperation during the verification process, and failure to provide convincing explanations. The appeal was dismissed, affirming the impugned order.