2007 (9) TMI 96 - AT - Central Excise

Deemed credit on grey fabrics Procedural lapse regarding non-declaration of place of goods where goods are stored - Not. 25/03 Credit inadmissible Interest is leviable from date of utilization of credit, not from the date of entry in RG-23 Part II Hence Interest not leviable

Summary

Issues:
1. Deemed credit on grey fabrics lying in stock as on 31-3-2003.
2. Compliance with conditions of deemed credit order.
3. Denial of credit by Revenue.
4. Imposition of penalty.
5. Entitlement to pay interest on disallowed credit.

Analysis:
1. The case involved the appellants, engaged in the manufacture of cotton fabrics, seeking deemed credit on grey fabrics in stock as of 31-3-2003 due to the introduction of Central Excise duty. The Government issued notifications requiring declarations of stock, subsequently amended to declare stock as of 1-4-2003. The Revenue clarified that stock locations must be declared. The appellants complied but faced denial of credit by the Revenue, leading to a penalty imposition by the adjudicating authority.

2. The appellant contended that necessary information was provided in the declaration, supported by documentary evidence like GRs and invoices, to prove the presence of grey fabrics in their stock. However, the Revenue argued that vague declarations mentioning locations like a godown or with a transporter without specific addresses did not fulfill the deemed credit conditions. The Revenue cited a Supreme Court decision emphasizing strict compliance with notification conditions, highlighting the importance of accurate declarations.

3. The Tribunal found that the appellant's declarations lacked specific addresses, maintaining the Revenue's denial of credit. However, considering the novelty of the excise duty on grey fabrics from 1-4-2003, the penalty imposition was deemed inappropriate and set aside. The Tribunal upheld the demand due to non-compliance with declaration requirements.

4. Regarding the interest on disallowed credit, the Commissioner held that as the appellants had not utilized the credit, they were not liable to pay interest. The Revenue contended that interest should be levied, citing a precedent. The Tribunal referred to a different case to determine that interest is chargeable from the credit utilization date, not the entry date in records. Consequently, the appeal by the Revenue for interest payment was dismissed.

5. In conclusion, the Tribunal upheld the denial of credit due to inadequate declarations, set aside the penalty, and dismissed the Revenue's appeal for interest payment. The judgment emphasized the importance of strict compliance with notification conditions for availing benefits and clarified the liability for interest on disallowed credit based on utilization dates.