2007 (10) TMI 202 - AT - Central Excise

Not. 25/03 clears that only on the value of the grey fabrics credit can be taken declaration filed disclosing the stock appellants weren t sure about the above fact so in decelerations, value of unprocessed goods were shown on the higher side if assessee was not clear about the condition of notification he could seek the assistance of their jurisdictional authorities as no help was sought by assessee, demand cannot be held to be barred by limitation personal penalty vacated

Summary

Issues:
Identification of correct valuation for availing Modvat credit under Rule 9A of Cenvat Credit Rules, 2002.
Applicability of time limitation for raising demands based on valuation discrepancies.

Analysis:
1. The appeals were consolidated as they pertained to the same issue arising from the Commissioner (Appeals) order. The appellants were involved in manufacturing processed MM Fabrics under Chapters 64 & 65 of CETA, 1985. They claimed one-time Modvat credit for specified inputs as per Notification No. 25/2003-C.E.(N.T.) dated 25-3-03. The dispute arose when audit revealed discrepancies in the declared stock value due to processing charges included in grey fabrics' value. The adjudicating authority denied excess credit and imposed penalties, leading to the present appeal.

2. Rule 9A(2) of Cenvat Credit Rules, 2002 allowed credit for duty paid on inputs in stock or process as of 31-3-2003, requiring a written declaration disclosing input details. The credit was limited to the value of inputs, excluding additional costs like processing charges. The Commissioner (Appeals) upheld this interpretation, emphasizing that declarations filed in April 2003 did not indicate inclusion of processing charges. The appellants' argument that the show cause notice exceeded the limitation period was dismissed, as the onus was on the assessee to provide accurate declarations.

3. The Tribunal concurred with the Commissioner's decision on confirming the demand based on correct valuation principles. However, considering the unique circumstances, the personal penalties imposed on the appellants were set aside. The judgment was pronounced on 26-10-2007, resolving the appeals in this manner.