Whether credit on fabrics admissible on basis of formula even if documentary evidence available?

PJ/CASE LAW/2015-16/2707

Case:-COMMISSIONER OF CENTRAL EXCISE, MUMBAI-I Versus PRAKASH COTTON MILLS P. LTD.

Citation:- 2015 (315) E.L.T. 110 (Tri. - Mumbai)

Brief Facts:-The brief facts of the case are that the respondents are the manufacturer of unprocessed fabric and which was exempted till 31-3-2003. On 1-4-2003, the unprocessed fabric became excisable, therefore, the Rule 9A of the CENVAT Credit Rules, 2002 was inserted for providing how the Cenvat credit on inputs, work in process and stock lying is available to the manufacturers. The respondent took the credit as provisions of Rule 9A(1) of the CENVAT Credit Rules, 2002 as documentary evidence. Revenue is of the view that the respondent are not entitled to take Cenvat credit as per Rule 9A(1) of the Rules as the same is not applicable to the case and they are entitled to take credit as per Notification 35/2003, dated 10-4-2003. Therefore, the proceedings were initiated. The Adjudicating Authority denied the Cenvat credit which was taken in excess as provided in Notification 35/2003 ibid. But on appeal before the Commissioner (Appeals), it was found that the respondents are entitled to take Cenvat credit as per Rule 9A(1) of the Rules. Therefore, he set aside the Adjudication order. Aggrieved from the same, the revenue is before Tribunal.

Appellants Contention:- The Revenue is in appeal against the impugned order wherein the Commissioner (Appeals) has allowed the Cenvat credit taken by the respondent on 1-4-2003. Revenue is of the view that the respondent are not entitled to take Cenvat credit as per Rule 9A(1) of the Rules as the same is not applicable to the case and they are entitled to take credit as per Notification 35/2003, dated 10-4-2003.

Respondents Contention:-The respondent took the credit as provisions of Rule 9A(1) of the CENVAT Credit Rules, 2002 as documentary evidence. It is explained by the respondent that the remaining stock was with the job worker, as per Rule 9A the goods lying with the job worker is also entitled for Cenvat credit.

Reasoning Of Judgement:-Heard both sides. As per Rule 9A(1) of the Rules, an assessee can take Cenvat credit on the basis of documentary evidence to ascertain how much credit is available. It is not in dispute that respondent has produced documentary evidence to avail Cenvat credit. Therefore, Notification 35/2003 is not applicable to the facts of this case as same is applicable where the assessee is taking credit without any documents. Therefore, the said Notification suggests the formula how the amount of Cenvat credit is to be calculated. As in this case, the respondent has taken the Cenvat credit on the basis of documentary evidences as per Rule 9A(1) of the Rules. The provisions of Notification No. 30/2003 are not applicable to the facts of this case. Therefore, the tribunal do not find any infirmity in the impugned order for availment of the Cenvat credit on the basis of documentary evidence. Further, there is a dispute that there was some excess credit taken by the respondent over and above the stock available at the physical verification. It is explained by the respondent that the remaining stock was with the job worker, as per Rule 9A the goods lying with the job worker is also entitled for Cenvat credit. In these terms, they do not find infirmity in the impugned order, appeal filed by the revenue is dismissed.

Decision:- Appeal dismissed.

Comment:- The analogy in the case is that as per Rule 9A(1) of Cenvat Credit Rules,2001, an assessee can take Cenvat credit on the basis of documentary evidence and the provisions of the Notification 35/2003 is not applicable in that case. Moreover, assessee is also entitled to cenvat credit of stock was lying with the job worker.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2707

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