2004 (3) TMI 268 - AT - Central Excise

Summary

Issues:
- Dispute over entitlement to Cenvat credit for inputs in stock as of 31-3-2000 at deemed credit rate of 12% or actual duty paid.

Analysis:
1. The dispute in the appeal revolves around the entitlement of the appellant, withdrawn w.e.f. 1-4-2000, to claim Cenvat credit for inputs in stock as of 31-3-2000 at either the deemed credit rate of 12% or the actual duty paid on the inputs.

2. The lower authorities allowed credit based on the duty actually paid on the inputs in stock, while the appellant contended that they should receive the deemed credit at the rate of 12% as per Notification 29/2000-CE. The denial of the deemed credit was justified by the lower authorities citing the Notification's effective date of 1-4-2000, excluding stock as of 31-3-2000.

3. Prior to 1-4-2000, Modvat credit was unavailable for units under compounded levy scheme, including hot steel re-rolling mills and induction furnace units. Circular No. 522/18/2000 stipulated that credit for stock as of 1-4-2000 required duty paying documents to be eligible for Cenvat credit, emphasizing the need for document support.

4. The appellant's entitlement to Cenvat credit for inputs in stock as of 1-4-2000 is affirmed. Notification 29/2000 allows the credit at a deemed rate of 12% of the invoice price, requiring the manufacturer's declared price in the invoice. The presence of the invoice is crucial per the Notification, with the deemed credit rate being applicable instead of the actual duty paid on the inputs.

5. The effective date of the Notification being 1-4-2000 means the appellant, meeting the criteria as of that date, is entitled to the deemed credit rate of 12% for inputs in stock. The applicable law on the date governs the credit calculation, leading to the allowance of the deemed credit and the setting aside of the impugned order in favor of the appellant with consequential relief granted.