2011 (4) TMI 297 - AT - Central Excise

Transitional cenvat credit - Rule 9A of the Cenvat Credit Rules, 2002 - show cause notice dated 01.10.03 proposing to deny the cenvat credit of Rs.38,27,932/- and of Rs.15,35,220/- and to confirm interest and to impose penalty - during the relevant period, there were various amendments to the provisions of Rule-9, allowing modvat credit in terms of the provisions of transitional Cenvat Credit Rules, 2002 and extending the facilities to the textile units - Held that sub rule 5 introduced in Rule 9A(b) refers to a manufacturer, who has already made declarations of the goods lying in stock as on 31.03.03 and has availed credit on or before 30th day of April 2002, whereas sub rule 9A5(a) refers to a manufacturer, who had not made the declaration at all - Decided in favour of the assessee

Summary

Issues:
1. Eligibility of transitional cenvat credit for inputs in stock.
2. Validity of declarations filed under Rule 9A of Cenvat Credit Rules, 2002.
3. Admissibility of cenvat credit based on subsequent declarations.
4. Interpretation of Rule 9A(5) regarding filing of declarations.
5. Dispute over the admissibility of cenvat credit and imposition of penalties.

Analysis:
1. The case involved the eligibility of transitional cenvat credit for inputs in stock as per Rule 9A of the Cenvat Credit Rules, 2002. The respondents, engaged in processing cotton and manmade fabrics, had filed declarations regarding their stock position. The Revenue contended that the credit availed by the respondents was not permissible under Rule 9A(5)(b) as they had filed declarations prior to the extension granted for filing such declarations.

2. The respondents had initially filed declarations on 07.04.03, followed by subsequent declarations on 11.04.03 and 25.04.03. A further declaration was made on 26.05.03 after the extension of the filing period. The Revenue raised concerns regarding the admissibility of the cenvat credit amounting to Rs.38,27,932/- based on the initial declarations and Rs.15,35,220/- based on subsequent declarations, arguing that the latter additions were inadmissible.

3. The Revenue initiated proceedings against the respondents, proposing to deny the cenvat credit availed and impose penalties. However, the Commissioner dropped the proceedings, citing the absence of any specific conditions or restrictions in Rule 9A that would disallow credit if declarations were not filed in a consolidated manner. The Commissioner emphasized the positive step taken by the Government to extend the filing deadline to enable manufacturers to avail credit on undeclared stock.

4. The Tribunal concurred with the Commissioner's reasoning, noting the various amendments to Rule-9 during the relevant period. It distinguished between manufacturers who had already made declarations and availed credit before a certain date and those who had not made any declaration at all. The Tribunal upheld that as long as there was no dispute about the stock, the credit would be admissible, and there was no infirmity in the Commissioner's order. Consequently, the Revenue's appeal was rejected.

In conclusion, the judgment clarified the provisions of Rule 9A regarding transitional cenvat credit, emphasized the importance of timely and accurate declarations, and upheld the admissibility of credit based on the stock position without any discrepancies.