2017 (3) TMI 591 - AT - Central Excise

Deemed CENVAT credit - clearances made by the appellant and demand of Cenvat credit related thereto is in respect of goods manufactured before 1-5-2001 and was lying in stock as on 30-4-2001. The said stock was cleared subsequently on payment of duty on advaloram basis for the reason that the special procedure prescribed under Rule 96ZNA to 96ZND of Central Excise Rules, 1944 - Held that - the stock of goods manufactured prior to 1-5-2001 and cleared thereafter, assessee is entitle for credit on input used as such - the appellant has rightly availed deemed Cenvat credit in respect of goods manufactured prior to 1-5-2001 and cleared thereafter on payment of duty on advolram basis - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of Rule 96ZNB(5) r.w. Rule 57 AK of Central Excise Rules, 1944 during 1-5-2001 to 30-6-2001.
2. Applicability of Rule 11 of Cenvat Credit Rules, 2001 during 1-7-2001 to 28-2-2002.

Issue 1:
The case involved the appellant engaged in manufacturing textile fabrics under Chapter No. 52, 54, and 55 of the Central Excise Act, 1985. The show cause notice alleged contravention of rules during specific periods. The appellant availed inadmissible deemed credit for old stock of processed fabrics during 1-5-2001 to 30-6-2001 and 1-7-2001 to 28-2-2002. The appellant claimed eligibility for Cenvat credit under specific notifications. The Order-in-Original confirmed the demands, penalties, and interest. The Commissioner (Appeals) upheld the decision, leading to the appeal before the tribunal.

Issue 2:
The appellant argued that clearances and Cenvat credit demands were for goods manufactured before 1-5-2001 and cleared later. They contended that the special procedure under Rule 96ZNA to 96ZND was not applicable to pre-1-5-2001 goods, making deemed credit admissible. The appellant cited relevant judgments supporting their stance. The Revenue reiterated the impugned order findings.

Analysis:
The tribunal analyzed the appellant's manufacturing history and transition to a special procedure post-1-5-2001. The tribunal noted the applicability of Rule 96ZNB and the conditions for availing special procedures. The tribunal highlighted that the appellant cleared pre-1-5-2001 goods under the old procedure, not under Rule 96ZNC. Referring to legal provisions and judgments, the tribunal emphasized that deemed credit was applicable to goods manufactured before 1-5-2001 and cleared thereafter, as in the present case. The tribunal cited the Bombay High Court judgment in a similar matter, supporting the appellant's position.

The tribunal concluded that the appellant rightly availed deemed Cenvat credit for goods manufactured before 1-5-2001 and cleared later under the ad valorem duty basis. The tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment provided a detailed analysis of the legal provisions, historical manufacturing practices, and relevant precedents to support the decision in the appellant's favor.