2007 (6) TMI 57 - AT - Central Excise

Cenvat/Modvat - Dispute arises related to (i) Credit demanded of goods in stock before the date of registration (ii) credit of goods which is in transit - Held that credit allowable in both cases

Summary

Issues:
Appeal regarding Cenvat credit for goods reportedly in transit on crucial date - Disallowance by original authority upheld by Commissioner (Appeals) due to lack of address where goods were lying. Appeal challenging denial of credit for goods reportedly in transit on crucial date - Commissioner (Appeals upheld denial due to lack of information about the location of goods.

Analysis:
The appeals before the Appellate Tribunal CESTAT, Ahmedabad involved a common issue arising from a common order-in-appeal. The first appeal pertained to M/s. Elecon Fabrics, where Cenvat credit amounting to Rs. 1,47,437/- was claimed for materials reportedly in transit on the crucial date. The original authority disallowed the credit as the inputs were not physically available with the appellants on the stipulated date. The Commissioner (Appeals) upheld this decision, emphasizing the absence of the address where the goods were located. The second appeal by M/s. Raghuvir Processors also dealt with the denial of credit amounting to Rs. 1,04,642/- for inputs reportedly in transit on the crucial date. The original authority and the Commissioner (Appeals) both rejected the claim due to the lack of confirmation regarding the location of the goods.

The learned Advocate for the appellants argued that the declarations were filed within the prescribed time limit set by the Central Board of Excise and Customs (CBEC). Referring to CBEC instructions, the Advocate highlighted the permissibility of taking credit for materials located at places other than registered premises under specific conditions. The Advocate also cited precedents, including judgments from the Tribunal, to support the appellants' case.

Upon careful consideration of the submissions, the Tribunal noted the CBEC's instructions regarding the declaration of stock as on a specific date and the availability of credit for goods located outside the factory premises. The Tribunal emphasized the requirement to declare the address of such premises where the stock was kept. It was observed that while credit for goods within the factory premises on the crucial date was undisputed, transitional credit for goods elsewhere was subject to fulfilling the declaration requirements. The Commissioner (Appeals) found fault with the appellants for not disclosing the address and transporter's details, leading to doubts about the claim's authenticity.

In the case of M/s. Elecon Fabrics, despite procedural lapses, the records and subsequent returns indicated the receipt and utilization of the disputed goods. Considering the transitional nature of the credit and the condonation of procedural lapses, the Tribunal set aside the Commissioner (Appeals)'s decision and allowed the appeals with consequential relief.

In conclusion, the appeals were allowed with consequential relief, emphasizing the importance of complying with declaration requirements for claiming transitional credit and the significance of maintaining accurate records to support such claims.