2007 (9) TMI 38 - AT - Central Excise

Cenvat/Modvat - Department contended that appellant were ineligible for credit in the finished products on the ground that the appellants had not declared the description, quantity and value of inputs contained in finished products - Held that appellant entitle for credit

Summary

Issues:
Quantification of credit admissible to manufacturers of grey cotton fabrics with reference to inputs lying in stock, in process, and contained in finished goods as on 1-4-2003 under Rule 9A(1) of Cenvat Credit Rules, 2002.

Analysis:
The appeals involved a dispute regarding the quantification of credit admissible to manufacturers of grey cotton fabrics concerning the inputs in stock, in process, and finished goods as on 1-4-2003 under Rule 9A(1) of the Cenvat Credit Rules, 2002. Rule 9A(1) allowed manufacturers to claim credit equal to the duty paid on inputs in stock, in process, or contained in finished products as of 31-3-2003, upon making a written declaration and providing documentary evidence of duty payment. Sub-rule (2) of Rule 9A permitted manufacturers without documentary evidence to claim credit as per the method in sub-rule (3) on inputs in stock. The Commissioner (Appeals) affirmed a demand for credit on inputs in finished products exceeding what was admissible under sub-rule (3) of Rule 9A. The appellants had claimed credit for inputs in stock and in process using the formula but failed to declare the quantity and value of inputs in finished products, leading to a denial of credit based on duty paying documents by the original authority.

The appellants argued that they were entitled to credit based on duty paying documents as they filed the declaration within the extended deadline of 15-6-2003, despite not specifying the inputs in finished products. The Show Cause Notice did not propose denying credit for failure to declare the quantity of inputs in finished products. The ld. SDR contended that credit could be availed simultaneously under Rule 9A(1) and (3) if the declaration was filed by the deadline. The Tribunal observed that the Rule did not prohibit manufacturers from claiming credit based on duty paying documents and the formula concurrently. The appellants had declared information for credit based on the formula for inputs in stock and in process, and later submitted duty paying documents for inputs in finished products. The Tribunal held that the appellants were eligible for credit on inputs in finished products based on duty paying documents, overturning the Commissioner's decision to restrict credit based on the formula. The impugned orders were set aside, and the appeals were allowed.