2009 (10) TMI 795 - AT - Central Excise

Summary

Issues involved: Deemed Cenvat credit availed by the appellant under Rule 9A of Cenvat Credit Rules, demand with interest, penalty imposition, requirement of declaration/intimation regarding stock as on specific dates, submission of evidence to prove stock existence, interpretation of Rule 9A provisions.

Deemed Cenvat credit under Rule 9A:
The appellant availed deemed Cenvat credit on stock of cotton yarn as per Rule 9A of Cenvat Credit Rules. The issue arose when the Revenue demanded the credit with interest and imposed a penalty equal to the demanded amount.

Submission of declaration and subsequent amendments:
The appellant submitted a declaration on 7-4-03 as required under Rule 9A. However, subsequent amendments required an intimation in case of no difference in stock between specific dates. The Revenue contended that the appellant failed to provide such intimation, leading to rejection of the declaration.

Evidence of stock existence:
The Revenue argued that the appellant did not declare the stock as on 1-4-03 and failed to provide evidence of stock existence on that date. The appellant's submission of income tax return was rejected for not showing a break-up of stock, leading to a requirement for additional evidence.

Interpretation of Rule 9A provisions:
After considering the submissions, the Tribunal analyzed the purpose of Rule 9A to allow traders/manufacturers to avail deemed Cenvat credit on stock as on 31-3-03. The Tribunal noted that subsequent provisions were meant to facilitate the assessee in case of additional quantities or transit stock, not to deny the credit. The Tribunal emphasized that the law did not mandate evidence to be provided with the declaration and found in favor of the appellants, waiving the pre-deposit of duty demand with interest and penalty.

Conclusion:
The Tribunal ruled in favor of the appellants, stating that they made a strong case in their favor regarding the deemed Cenvat credit under Rule 9A. The requirement for pre-deposit of duty demand with interest and penalty was waived, and the stay petition was allowed unconditionally during the appeal's pendency.