9911796707
TMI Blog2011 (2) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... .S. Khandeparkar, Shri Rakesh Kumar, JJ. S/Shri B.L. Narasimhan Hemant Bajaj, Advocates, for the Appellant. Shri B.K. Singh, Jt. CDR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral) (for the Bench)]. Since common questions of law and facts arise in both the appeals, they were heard together and are being disposed of by this common order. We have heard at length Jt. CDR for the appellants and learned Advocates for the respondents. We have also perused the records. 2. Both the appeals arise from a common order passed by the Commissioner (Appeals) Chandigarh on 24-5-2005 whereby the orders-in-original disallowing the Cenvat credit and confirming the demand for interest and imposition of penalty have been set aside. The Joint Commissioner, Chandigarh by his order dated 6-5-2005 had disallowed the Cenvat credit to M/s. Saluja Exim to the extent of Rs. 15,98,385/- and while imposing the penalty of equal amount, had also demanded interest on the amount due. The Jt. Commissioner by his another order of the same date had disallowed the credit to the extent of Rs. 19,45,955/- while imposing penalty of equal amount and confirming the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was further sought to be contended by the Jt. CDR that the very purpose of grant of credit is to enable the assessee to utilise the same towards payment of duty on the final product. In the absence of final products being becoming dutiable, question of utilising credit availed on the inputs, either in the process of manufacture of the final product or already consumed in the final product in stock or even in lying in stock as such cannot arise as the credit on such inputs cannot be utilised in relation to the exempted or non-dutiable goods. The credit can be availed only in relation to duty paid inputs which are to be utilised in the dutiable products. The provisions of law and the notification cannot be construed contrary to the basic scheme of the credit available under the Rules. 5. The learned advocate for the respondent, on the other hand, taking us through Rule 9A of the said Rules, the said circular dated 20-3-2003 as well as Circular No. 703/19/2003-CX., dated 20-3-2003 and the notification in question submitted that prior to 1-4-2003, the garments were not subjected to payment of duty and therefore, there was no question of goods being removed by following any pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was required to maintain the documentary evidence in relation to availment of credit. This being basic difference between two statuary provisions, the expression used in Rule 11(2) as lying in stock cannot be understood in the same sense as has to be understood in relation to Rule 9A. 6. The basic facts which are relevant for the decision in the matter are not in dispute. Undisputedly the goods were found having stored at the port area after being removed from the factory premises. The basic controversy in the matter is whether the goods so stored can said to be goods lying in stock with the manufacturer . 7. The respondents claim benefit of notification No. 35/2003-C.E. (N.T.), dated 10-4-2003 as amended by Notification No. 47/2003-C.E. (N.T.), dated 17-5-2003. The said notifications were issued in exercise of powers under sub rule (3) of Rule 9A of the Central Excise Rules, 2002. 8. Rule 9A of the said Rules was brought on the statute book with effect from 1-4-2003 pursuant to notification in that regard having been issued bearing No. 25/2003-C.E. (N.T.), dated 25-3-2003. The purpose behind the introduction of notification under Rule 9A was that the garment product w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter relating to the goods which were in transit and to be received in the factory premises of the assessee held that such goods cannot be claimed by the assessee to be lying in stock with him. It was held that the procedure of law clearly requires the goods to be capital goods or inputs to have been brought in the factory premises. And unless the articles enter factory premises they cannot be called as the capital goods or the inputs in terms of Rule 3 of the Cenvat Credit Rules and the duty paid on such articles can not generate the credit under the provisions of the Cenvat Credit Rules. At the same time, it was also observed that it does not mean that in case of insufficiency of the place at the registered premises to store the goods after temporary arrangements to be made to store the goods at some other places disclosed to the department, the goods stored at such places, could not be considered as the goods lying in stock. 13. Taking into consideration, the undisputed facts and applying the provisions of law, it cannot be disputed that the credit in terms of the said Rules can be availed in relation to the duty paid on the inputs only in cases where the final product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer to arrive at the exact quantity of credit available to them in relation to the inputs to be utilised in the final product, which would be subjected to payment of duty, that therefore, the inputs lying in stock to be so utilised were made available to the manufacturers to avail credit in respect of duty paid on such inputs. This is clear from the said provision of law itself. One can certainly analyse the circulars issued by the Board to ascertain whether there is any further explanation in this regard issued by the Board. 15. The notification uses the expression inputs lying in stock without any further explanation in that regard, and rightly so, as the notification has been issued essentially under sub-rule (3) of Rule 9A and obviously therefore, the meaning to be attached to the said expression in the said notification cannot be different from the one to be attached to the said expression used in Rule 9A. 16. The Circular dated 28-3-2003 clarifies that even the goods which were stored in the premises other than the registered one or to be registered premises, the declarant has to give address of such other premises. Similarly, Circular dated 25-3-2003 clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such goods would include the goods which were not ultimately utilised in the manufacture of non-dutiable goods. 19. Considering the undisputed facts, the goods were removed to the port area on issuance of the invoices disclosing the buyers name. Admittedly, they were not subjected to duty liability at the time of clearance of goods from the factory. Obviously therefore, the goods were not final products which were subjected to payment of duty. Hence, the inputs in such goods were not entitled to avail the credit in relation to the duty paid thereon and hence they were rightly excluded from being considered as the goods lying in stock . 20. As far as the penalty aspect is concerned, undisputedly the matter relates to interpretation of provision of law in respect of notification and therefore question of imposition of penalty does not arise. Thus, the appeal partly succeeds. The impugned order to the extent it set asides the order passed by the adjudicating authority disallowing the Cenvat credit is hereby set aside and the order of the adjudicating authority disallowing the Cenvat credit and confirming the demand of interest is hereby restored and confirmed. The order as fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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