2003 (8) TMI 129 - AT - Central Excise

Summary

Issues: Denial of credit under Rule 57A(1) on processed fabrics received, interpretation of Notification 29/96, reliance on trade notice, consideration of deemed credit and actual credit under Rule 57A(2), failure to apply provisions correctly by the Commissioner (Appeals).

In this case, the appellant, engaged in textile fabric processing, faced a denial of credit under Rule 57A(1) for processed fabrics received, based on a trade notice alleging non-compliance with the Commissioner's directives. The appellant utilized deemed credit under Notification 29/96 for grey fabrics and Rule 57A(1) credit for processed fabrics. The Deputy Commissioner and Commissioner (Appeals) upheld the denial, imposing penalties. The notification specifies rates for inputs based on manufacturing status, excluding manufacturers availing credit for inputs under Rule 57A(1), clarifying that processed fabric used as input is exempt. The trade notice, aligned with a 1996 circular, did not support the denial's basis. It differentiated between deemed credit and Rule 57A(1) credit, allowing the latter for processed fabrics. The Commissioner (Appeals) failed to justify why both credits couldn't be availed simultaneously, overlooking the appellant's entitlement to do so.

Therefore, the Appellate Tribunal CESTAT, Mumbai allowed the appeal, setting aside the impugned order, emphasizing the correct interpretation of Notification 29/96, the distinction between deemed and actual credits, and the misapplication of provisions by the Commissioner (Appeals) in denying the credit to the appellant for processed fabrics received.