2010 (4) TMI 949 - AT - Central Excise

Summary

Issues:
- Dispute regarding deemed credit under Notification No. 6/2002-C.E. (N.T.) for processed man-made fabrics cleared after 31-3-03.
- Interpretation of statutory provisions for availing Cenvat credit.
- Consideration of limitation in availing Cenvat credit.

Analysis:

Issue 1: Dispute regarding deemed credit under Notification No. 6/2002-C.E. (N.T.) for processed man-made fabrics cleared after 31-3-03:
The case involved a dispute over the availment of deemed credit under Notification No. 6/2002-C.E. (N.T.) for processed man-made fabrics cleared for home consumption after 31-3-03. The respondent had a stock of processed fabrics as of 31-3-03 and cleared them in April 2003, availing deemed credit under the said notification. The adjudicating authority disallowed the credit, leading to penalties and interest. The Commissioner (Appeals) set aside the demand, stating that the deemed credit had been earned before the notification's end date. However, the Revenue challenged this finding, arguing that as the goods were cleared after the notification's expiry, the respondent was not entitled to the credit.

Issue 2: Interpretation of statutory provisions for availing Cenvat credit:
The Tribunal analyzed the relevant statutory provisions, particularly Notification No. 6/2002-C.E. (N.T.), which allowed credit at the time of final product clearance without the need for duty payment evidence. The Tribunal noted that while the final product was in stock on 31-3-03, clearance occurred after the notification ceased to be in effect. Emphasizing that credit was to be allowed at the time of final product clearance, the Tribunal found that the Commissioner (Appeals) had misinterpreted the statute. Consequently, the Tribunal set aside the impugned order, ruling that the respondent could not claim benefits under an inoperative notification.

Issue 3: Consideration of limitation in availing Cenvat credit:
In addition to the substantive dispute, the respondent raised a limitation issue before the Commissioner (Appeals). The respondent argued that since they availed the Cenvat credit in April 2003 and reported it in their ER-1 returns, the show cause notice issued in 2008 was beyond the limitation period. However, the Commissioner (Appeals) did not address this contention while allowing the appeal on merit. Therefore, the Tribunal remanded the matter back to the Commissioner (Appeals) to decide on the limitation aspect after considering submissions from both parties.

In conclusion, the Tribunal ruled in favor of the Revenue, setting aside the Commissioner (Appeals)' decision on the deemed credit issue under Notification No. 6/2002-C.E. (N.T.). The Tribunal also directed a reconsideration of the limitation aspect by the Commissioner (Appeals) for a comprehensive resolution of the case.