2003 (10) TMI 244 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to Cenvat credit for Glass Bottles and Plastic Crates lying in stock as of 1-4-2000.
2. Validity of the Deputy Commissioner's letter dated 24-1-2001 allowing Cenvat credit.
3. Interpretation of Rule 57AB and Rule 57AG under the new Cenvat Rules.
4. Applicability of transitional provisions for inputs lying in stock.
5. Relevance of Board's Circular dated 29-8-2000.
6. Imposition of personal penalty under Section 11AC.

Issue-wise Detailed Analysis:

1. Entitlement to Cenvat credit for Glass Bottles and Plastic Crates lying in stock as of 1-4-2000:
The appellants claimed Cenvat credit for Glass Bottles and Plastic Crates lying in stock as of 1-4-2000, based on the introduction of new Cenvat Rules. However, the Tribunal noted that Rule 57AB allows credit only for inputs received in the factory on or after 1-4-2000. Since the inputs were received before this date, the credit could not be allowed under Rule 57AB. Additionally, Rule 57AG(1) only allows the transfer of credit earned under previous rules, which was not applicable here as the appellants had not earned any credit for these inputs prior to 1-4-2000.

2. Validity of the Deputy Commissioner's letter dated 24-1-2001 allowing Cenvat credit:
The appellants argued that the Deputy Commissioner's letter dated 24-1-2001, which allowed them to take Cenvat credit, should be treated as an order and thus final. The Tribunal disagreed, stating that the letter was merely a communication and not an adjudicative order. Consequently, the Revenue was not estopped from initiating fresh proceedings through a show cause notice dated 11-9-2001.

3. Interpretation of Rule 57AB and Rule 57AG under the new Cenvat Rules:
Rule 57AB extends Cenvat credit to inputs received on or after 1-4-2000, while Rule 57AG(1) allows the transfer of credit earned under previous rules. Since the appellants did not earn any credit for the Glass Bottles and Plastic Crates before 1-4-2000, they were not entitled to claim such credit under the new rules. The Tribunal emphasized that fiscal statutes must be interpreted as they stand, without adding or subtracting provisions.

4. Applicability of transitional provisions for inputs lying in stock:
The appellants contended that transitional provisions should apply to inputs lying in stock, similar to previous instances under Rule 57H. The Tribunal refuted this argument, stating that the new Cenvat Rules did not contain any provision akin to Rule 57H. Therefore, there was no legal basis for allowing credit for inputs lying in stock as of 1-4-2000.

5. Relevance of Board's Circular dated 29-8-2000:
The appellants relied on a Board's Circular dated 29-8-2000, which allowed Cenvat credit for inputs lying in stock when an SSI unit crosses the exemption limit. The Tribunal found this circular inapplicable to the present case, as it dealt with a different scenario where an SSI unit starts paying duty after crossing the exemption limit. The circular did not address the situation of transitioning from Modvat to Cenvat credit for inputs lying in stock.

6. Imposition of personal penalty under Section 11AC:
The Tribunal set aside the personal penalty of Rs. 20 lakhs imposed under Section 11AC. It noted that the appellants took the credit based on their interpretation of a Board's Circular and had informed the Revenue Authorities. Given that the Assistant Commissioner initially interpreted the circular favorably for the appellants, there was no mala fide intention. Consequently, the penalty was deemed unjustified.

Conclusion:
The Tribunal confirmed the demand of duty along with interest but set aside the personal penalty. The appeal was disposed of on these terms.