2013 (11) TMI 742 - AT - Central Excise

Disallowance of Transitional cenvat credit manufacturing of Cotton Fabrics Man made Fabrics and Knitted/Hosiery Fabrics - Requirement to make declaration of stock as on 31.03.2003 as per Notification No.40/2003 Held that - The Government of India intended that so long as the assessee keeps the records of production clearance particulars of receipt of inputs and pays the applicable duty all procedural lapses if any should be ignored - The appellant filed declaration for their stock as on 31-03-2003 for stock lying in their factory - The appellant qualifies and satisfied the Government of India s scheme and has kept the records of production clearance particulars of receipt of inputs processed it and paid the applicable excise duty on clearance of their final products Following OMKAR TRADERS Versus COMMISSIONER OF C. EX. AHMEDABAD 2009 (10) TMI 795 - CESTAT AHMEDABAD - one time transitional credit under Rule 9A allowed to the appellant - I have also taken into consideration all factors relating to the case and come to conclusion that if such one-time credit is not allowed as envisaged in scheme of transforming deemed basis into actual basis it will cause injustice to the appellant in the facts of the case at the transformation stage itself when the appellant has also paid actual duty while processing inputs on which appellant had taken only credit and also reversed credit. These are the clinching evidences in favour of the appellant apart from the facts of this case CBEC Circulars press note and decisions relied upon by the appellant - the revenue has not discharged their burden to prove that the fabrics in question declared as of 31-03-2003 were in fact pertained to period after 01-04-2003 onwards - Revenue has not produced any evidences to prove that the input fabrics were received only after 01-04-2003 - Had it been so then such fabrics would have been under the cover of duty paying documents. Documents submitted beyond the time limit Held that - The appellant s declaration dt. 13-06-2003 received in the department on 16-03-2003 involving credit - In fact 15-06-2003 was Sunday and declaration dt. 13-06-2003 which was received on 16-03-2003 can be accepted as valid declaration made for claiming onetime credit in terms of Section 4 of the Limitation Act 1963 Decided in favour of Assessee.

Summary

Issues Involved:

1. Eligibility for one-time transitional Cenvat Credit under Rule 9A of the Cenvat Credit Rules 2002.
2. Validity of declarations filed by the appellant for stock as on 31-03-2003/01-04-2003.
3. Timeliness of the declaration filed on 13-06-2003 and received on 16-06-2003.
4. Compliance with procedural requirements and the impact of clerical errors.

Issue-wise Detailed Analysis:

1. Eligibility for One-time Transitional Cenvat Credit:
The appellant, engaged in manufacturing various fabrics, claimed one-time transitional Cenvat Credit under Rule 9A of the Cenvat Credit Rules 2002 for stock as on 31-03-2003/01-04-2003. The scheme allowed credit on inputs, semi-finished goods, and finished goods lying in stock on the specified date. The appellant filed declarations for such stock and claimed a total credit of Rs. 17,75,995/-. The adjudicating authority initially disallowed this credit, leading to the appeal.

2. Validity of Declarations Filed:
The appellant contended that they were under a bona fide belief regarding the declaration requirements and filed declarations dated 23-05-2003, 13-06-2003, and 13-06-2003, received by the department on 16-06-2003. These declarations were for stock lying in their other grey godown premises or in transit as on 31-03-2003. The appellant argued that the declarations were valid and eligible for the credit under Rule 9A, supported by CBEC clarifications and extended time limits for filing such declarations.

3. Timeliness of the Declaration Filed on 13-06-2003:
The department objected to the declaration dated 13-06-2003, received on 16-06-2003, as it was beyond the prescribed time limit of 15-06-2003. The appellant argued that 15-06-2003 was a Sunday, and the declaration received on the next working day should be considered within the time limit per Section 4 of the Limitation Act 1963. The Tribunal accepted this argument, validating the declaration for claiming credit of Rs. 86,167/-.

4. Compliance with Procedural Requirements and Impact of Clerical Errors:
The appellant provided comprehensive documentation, including registers and letters, showing the receipt, processing, and clearance of the declared stock on payment of appropriate duty. They also reversed Rs. 2,00,071/- on noticing clerical errors. The Tribunal noted that the appellant maintained proper records and paid applicable duties, aligning with the Government's intent to ignore procedural lapses if substantive compliance was met.

Conclusion:
The Tribunal found that the appellant complied with the substantive requirements of Rule 9A and the Government's scheme. The declarations were valid, and the appellant had processed and cleared the inputs on payment of duty. The Tribunal set aside the impugned order and allowed the appeal with consequential benefits, emphasizing that the revenue failed to prove that the declared stock pertained to a period after 01-04-2003. The decision was in line with previous rulings favoring the trade in similar cases.