2009 (6) TMI 792 - AT - Central Excise

Summary

Issues involved:
Dispute over deemed credit availed by the assessee, calculation of deemed credit under Rule 9A of the Cenvat Credit Rules, 2002, misdeclaration of input stock value, difference between deemed credit actually taken and due, applicability of sub-rule (3)(a) and (b) of Rule 9A, invocation of notification 35/03-C.E. (N.T.), penalty imposition under Section 11AC of the Central Excise Act.

Detailed Analysis:

1. Deemed Credit Dispute:
The dispute in this case revolves around the deemed credit availed by the assessee in April 2003. The department sought to recover Rs. 1,50,517/- from the assessee as deemed credit, which was contested by the party. The original authority confirmed the demand and imposed a penalty of Rs. 10,000/-. The main issue is the discrepancy between the deemed credit actually taken by the assessee and the amount due.

2. Calculation under Rule 9A:
Under Rule 9A of the Cenvat Credit Rules, 2002, the appellants were entitled to avail deemed credit on inputs in stock or in process as on 31-3-2003. The method of calculating deemed credit was provided under sub-rule (3), with different clauses for inputs in stock, under process, and in finished products. The dispute arose from the misdeclaration of input stock values, leading to a demand for the differential duty amount.

3. Applicability of Sub-Rules (3)(a) and (b):
The case involved a debate on whether the deemed credit should be calculated under sub-rule (3)(a) or (b) of Rule 9A. The Revenue claimed that the appellants misdeclared values to claim higher deemed credit. The department followed the procedure under clause (a) of sub-rule (3), while the appellants argued for clause (b). The correct application of the sub-rules was crucial in determining the admissible deemed credit.

4. Invocation of Notification 35/03-C.E. (N.T.):
Both parties chose to follow the procedure outlined in Notification 35/03-C.E. (N.T.) for determining the admissible deemed credit. However, it was observed that clause (b) of sub-rule (3) was erroneously invoked by the appellants. The lower appellate authority held that clause (a) was applicable, and the department's procedure under the notification was correct. The notification's applicability was crucial in the calculation of deemed credit.

5. Penalty Imposition:
The imposition of a penalty under Section 11AC of the Central Excise Act was a consequential aspect of the dispute. The penalty of Rs. 10,000/- was upheld in the adjudication, adding a financial consequence to the deemed credit issue. The dismissal of the appeal meant the penalty stood, emphasizing the seriousness of adherence to the rules and correct declarations.

In conclusion, the judgment upheld the department's decision regarding the deemed credit dispute, emphasizing the correct application of Rule 9A and the relevant sub-rules. The invocation of the notification and adherence to the prescribed procedures were crucial in determining the admissible deemed credit. The penalty imposition highlighted the consequences of non-compliance with the statutory provisions, underscoring the importance of accurate declarations and adherence to legal requirements.