2007 (11) TMI 115 - AT - Central Excise

Stock of inputs as on 1-4-2000 which were bought from the units working under Compounded Levy Scheme which stood abolished from 31-3-2000 - Circular No. 522/2000, dated 31-3-2000 permitted the assessees to take deemed credit of duty in respect of such inputs duly wrote a letter to Jurisdictional Officers to inform about taking credit - proceedings proposing to deny the credit to them is not legal - appeal is allowed with consequential benefit to the appellants

Summary

Issues:
1. Availability of deemed credit for inputs bought under Compounded Levy Scheme abolished from 31-3-2000.
2. Requirement of permission from Higher Authorities for taking credit.
3. Silence of Jurisdictional officers on the proposal to take credit.
4. Issuance of Show Cause Notice proposing denial of credit.

Analysis:
1. The Appellants had inputs bought under the Compounded Levy Scheme, which was abolished from 31-3-2000. A circular permitted them to take deemed credit of duty for such inputs. The Appellants had these inputs in their Register on 1-4-2000. They contended that they were verbally instructed by Jurisdictional Officers to seek permission from Higher Authorities before claiming the credit. Despite writing letters and submitting necessary returns, the officers neither approved nor disapproved the proposal to take credit.

2. The Appellate Tribunal noted that the Appellants were entitled to the credit for the inputs in their possession on 1-4-2000. The Tribunal observed that the quantum of credit taken was not in question. Since the Jurisdictional officers remained silent on the matter and did not object to the credit being taken, the Tribunal found the proceedings proposing to deny the credit to be unjust and improper.

3. The impugned Show Cause Notice issued on 13-2-2001 sought to deny the credit to the Appellants. However, the Tribunal, considering the circumstances and the lack of objection or challenge to the credit taken by the Appellants, set aside the impugned order. Consequently, the appeal was allowed, granting consequential benefit to the Appellants for the deemed credit they were entitled to.

In conclusion, the Appellate Tribunal held that the Appellants were rightfully entitled to the credit for the inputs they had on 1-4-2000, purchased under the abolished Compounded Levy Scheme. The Tribunal found the proceedings to deny the credit unjust, given the silence of the Jurisdictional officers and the Appellants' compliance with the necessary procedures. The impugned order was set aside, and the appeal was allowed in favor of the Appellants, ensuring they receive the consequential benefit of the deemed credit.