2022 (2) TMI 1119 - HC - Central Excise

CENVAT Credit - goods stored in the godown/depot near the ports - goods in stock or not - it is claimed that credit must be allowed in the goods stored in the godown/depot near the ports because the said goods had already been cleared from the factory prior to the issuance of the notification - Rule 9-A of the Cenvat Credit Rules, 2002 - HELD THAT - It was noticed by the Adjudicating Authority that the documents, i.e. invoices and transport documents, submitted by the appellant showed that the goods in question had been removed from the factory for the period 11th November, 2002 to 28th March, 2003 and 27th November, 2002 to 27th March, 2003. The goods had been cleared on the basis of commercial invoices and were lying at the port for export. Admittedly, the goods had been removed to the port area on issuance of invoices disclosing the buyers name. The goods were not subjected to duty liability at the time of clearance from the factory. Since the goods had been removed from the factory area to the port area on the basis of invoices disclosing buyers name, the same were liable to be excluded from being considered as goods lying in stock . In this situation, Adjudicating Authority rightly came to the conclusion that the goods had already been removed from the premises of the appellant and had been discounted from the stock account maintained at the factory. Therefore, the appellant could not claim that the goods were still lying in its stock. As per Rule 9-A of the Rules, a manufacturer could avail credit vis- -vis equal to the duty paid on inputs of such finished product, lying in stock or in process or contained in finished products, lying in the stock as on 31st March, 2003 by making a written declaration. However, in the present case, the Adjudicating Authority as well as learned Tribunal rightly came to the conclusion that the goods in question could not be said to be lying with the assessee in stock as they had already been removed to the port area from the factory on the basis of issuance of invoices disclosing buyers name. Appeal dismissed.

Summary

Issues:
1. Interpretation of Cenvat Credit Rules regarding goods stored in port area.
2. Entitlement of manufacturer to claim Cenvat Credit on goods stored near ports.
3. Determination of goods as "goods in stock" for Cenvat Credit purposes.

Analysis:
1. The judgment involves appeals arising from a common order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi Principal Bench, regarding the interpretation of the Cenvat Credit Rules in relation to goods stored in port areas by a manufacturer of readymade garments falling under Chapter heading 61 of the Central Excise Tariff Act, 1985.

2. The appellant contended that it was entitled to claim Cenvat Credit on goods stored in its godown near the port area prior to 1st April, 2003, as per the provisions of the Cenvat Credit Rules. The respondent-department, however, argued that since the goods had been removed to the port area from the factory based on invoices issued to purchasers, they could not be considered as part of the manufacturer's stock.

3. The Court examined Rule 9-A of the Cenvat Credit Rules, which allows manufacturers to avail credit equal to duty paid on inputs of finished products lying in stock as on 31st March, 2003, upon making a written declaration. In this case, it was established that the goods in question had been removed from the factory to the port area based on commercial invoices and were intended for export, not subjected to duty liability at the factory. The Adjudicating Authority rightly concluded that these goods were no longer part of the manufacturer's stock and could not be claimed for Cenvat Credit.

4. The judgment emphasized that for a manufacturer to avail Cenvat Credit under Rule 9-A, the goods must be genuinely lying in the manufacturer's stock as on the specified date. Since the goods had been physically moved to the port area based on invoices indicating buyer details, they were not considered part of the manufacturer's stock, leading to the dismissal of the appeals challenging the Tribunal's decision.

5. Ultimately, the Court found no grounds to interfere with the impugned order dated 22.02.2011, as the goods stored near the ports were deemed to have been removed from the manufacturer's premises and not eligible for Cenvat Credit. Consequently, the appeals were dismissed, and any pending miscellaneous applications were also disposed of accordingly.