2007 (10) TMI 192 - AT - Central Excise

Assessees have not taken the deemed credit in their deemed credit register at the time of clearances of the finished goods but they have taken the same in their deemed credit register a few days after the clearance - in the deemed credit system, an additional stipulation is made to that extent that credit cannot be taken earlier to the date of clearance of the final product so demand raised for delay in availment of credit is set aside order of original authority and Comm (A) are justified

Summary

Issues:
- Interpretation of Notification No. 29/96-C.E. (N.T.)
- Deemed credit system under Cenvat scheme
- Timing of taking credit in deemed credit register
- Payment of duty from PLA balance
- Upholding of orders by Original Authority and Commissioner (Appeals)

Interpretation of Notification No. 29/96-C.E. (N.T.):
The appeals by the department were based on a common Order-in-Appeal dated 13-10-2003. The issue revolved around the assessees not taking deemed credit in their register at the time of finished goods clearance but doing so a few days later. The Tribunal examined Notification No. 29/96-C.E. (N.T.) and emphasized that the credit of declared duty deemed to have been paid should be allowed at the time of clearance without the need for documents evidencing payment. The Tribunal highlighted the difference between normal Cenvat credit practice and the deemed credit system, stating that in the latter, credit cannot be taken before the date of final product clearance.

Deemed Credit System under Cenvat Scheme:
The Tribunal explained that under the Cenvat scheme, manufacturers can take credit immediately upon receiving raw materials and use it for duty payment on final products. However, in the deemed credit system, an additional stipulation requires credit availability only at the time of final product clearance. This distinction aims to prevent immediate availing of deemed credit upon raw material receipt. The judgment clarified that deemed credit cannot be taken before the final product clearance date.

Timing of Taking Credit in Deemed Credit Register:
Regarding the timing of taking credit in the deemed credit register, the Tribunal noted instances where assessees had to pay duty from PLA balance due to a revenue drive, despite having balance in the deemed Modvat credit register. The Tribunal upheld the findings of the Original Authority and Commissioner (Appeals) in favor of the assessees, emphasizing that the credit should not be taken earlier than the final product clearance date.

Payment of Duty from PLA Balance:
The judgment highlighted cases where assessees had to pay duty from PLA balance while maintaining balance in the deemed Modvat credit register. This situation arose due to a revenue drive, indicating that the assessees complied with duty payment requirements despite having credit available in the deemed credit register.

Upholding of Orders by Original Authority and Commissioner (Appeals):
After considering the submissions and relevant provisions, the Tribunal concluded that there was no reason to interfere with the concurrent findings of the Original Authority and Commissioner (Appeals) in favor of the assessees. Consequently, the appeals by the Department were rejected, and the connected cross-objection was disposed of accordingly.