2010 (10) TMI 340 - AT - Central Excise

Whether the goods lying with the transporter which were yet to be received in the factory can be considered as goods lying in stock - Rule 9A of the Cenvat Credit Rules - Circular No. B3/3/2003-TRU, dated 28th March 2003 issued by the Board co - referring to the Board Circular, it would be clear that even those goods which are stored at the place other than the registered place would also include to be goods in stock - the address of the said premises or where such goods are kept, must be declared by the assessee in the stock declaration. - the appellants were not able to disclose exact address of storage of the goods as they were in possession of the transporter - Demand upheld. As regards the issue relating to penalty, it was sought to be contended that the declarations were filed as to how the goods were sought to be procured by the appellants - the goods were yet to be received were claimed to be in stock with the appellants with the sole intention to avail the credit arising out of the duty paid on such goods, it would obviously disclose that the appellants were attempting to avail credit unlawfully - The provisions of law in relation to the matter in issue were very clear and there was no scope for any mis- understanding in that regard - Accordingly the appeals are dismissed

Summary

Issues:
Interpretation of Rule 9A of Cenvat Credit Rules - Whether goods with transporter can be considered as goods in stock.

Analysis:
1. The appeals before the Appellate Tribunal involved a common issue regarding the interpretation of Rule 9A of the Cenvat Credit Rules. The central question was whether goods lying with a transporter, yet to be received in the factory, could be deemed as goods in stock within the meaning of the said provision.

2. The facts were undisputed - the goods were with the transporter and had not reached the factory. The appellants argued that they had acquired the right to the goods, as evidenced by declarations filed, and thus, the goods should be considered in stock. However, the department contended that until goods enter the factory premises, they cannot be classified as goods in stock.

3. The Tribunal examined Rule 9A of the Cenvat Credit Rules, which allowed credit on inputs lying in stock as of a specified date. The rules required goods to be within the factory premises to qualify as inputs or capital goods. Therefore, the goods had to physically enter the factory to be considered in stock for availing benefits under Rule 9A.

4. The Commissioner (Appeals) held that goods not received cannot be considered as stock. The Board's intention was clear - credit should not be denied on stock not present in the factory premises. The appellants failed to declare the premises where the goods were stored, and no concrete evidence proved the goods were part of their stock on the relevant date.

5. The Tribunal referred to a Circular and a previous case to emphasize strict compliance with conditions for availing benefits under notifications or rules. The appellants' failure to disclose the exact storage location of goods with the transporter indicated non-compliance with the necessary conditions.

6. Regarding penalties, the appellants' claim of misunderstanding or confusion about the provisions was rejected. The Tribunal found that the appellants knowingly attempted to avail credit unlawfully by claiming goods with the transporter as in stock, leading to the dismissal of the appeals.

7. In conclusion, the Tribunal dismissed the appeals, upholding the lower authorities' decisions regarding the interpretation of Rule 9A and the imposition of penalties. The case highlighted the importance of strict compliance with legal provisions and conditions for availing benefits under tax laws.