SIVASANKARI MILLS, ANNAI AROKIA Vs. CCE

JUDGEMENT

(1.) THE captioned appeals have been filed by M/s. Sivasankari Mills, Somanur, (appeal No. E/352/05), M/s. Annai Arokia Matha Mills (appeal No. E/476/05) and M/s. Annai Arokia Matha Textiles (appeal No. E/475/05) against the respective orders in appeal No. 105/2005 -CE, 107/2005 -CE, 108/2005 -CE all dated 30.03.2005 passed by the Commissioner (Appeals), Coimbatore. The impugned orders affirmed demand of duty of respectively Rs. 2,57,423/ -, Rs. 30,914/ -, Rs. 47,041/ - along with equal amount of interest from the appellants. The appeals involve a common dispute relating to quantification of credit admissible to manufacturers of grey cotton fabrics with reference to the quantum of inputs lying in stock, in process and contained in finished goods as on 01.04.2003, in terms of Rule 9A(1) of Cenvat Credit Rules 2002, (in short CCR), as they existed during the material period. The said Rule 9A(1) provided for the manufacturers to avail credit equal to the duty paid on inputs lying in stock or in process or contained in finished products (falling in chapters 52 to 63) lying in stock as on 31.03.2003, on making a written declaration of the description, quantity and value of the stock of inputs (whether lying in stock or in process or contained in finished products lying in stock) and subject to availability of documents evidencing actual payment of duty thereon. As per Sub -rule (2) of Rule 9A, such manufacturers who are unable to produce documentary evidence for payment of duty were entitled to avail credit calculated in the manner prescribed in Sub -rule (3) of Rule 9(A) on such inputs lying in stock etc, on making a written declaration of the description, quantity and value of such inputs. In the orders impugned in the appeals, the Commissioner (Appeals) has affirmed the demand of credit relating to inputs contained in the finished products, lying in stock as on 31.03.2003, in excess of what was admissible as per the formula contained in Sub -rule (3) of Rule 9A. The appellants in all these cases had taken credit in respect of inputs in stock and inputs in process, following the formula. As regards credit admissible with reference to the inputs contained in the finished products lying in stock as on 31.3.03, all the three appellants had declared the quantity and value of the finished products in stock as on 31.03.03 instead of quantity of inputs contained in such finished products. The appellants were in possession of duty paying documents in proof of credit admissible on the quantity of inputs contained in the finished goods in stock. However, the original authority had held that the appellants were ineligible for credit on the basis of duty paying documents on inputs contained in the finished goods on the ground that they had chosen to avail the credit on the basis of formula prescribed in Sub -rule (3) of Rule 9A in respect of stock of inputs and inputs contained in working process. The Commissioner (Appeals) overruled that objection in the impugned order and decided that the manufacturers could avail the methods in Rule 9(A)(1) and (2) simultaneously. However, the Commissioner (Appeals) denied the credit admissible on the basis of duty paying documents for the inputs contained in the finished goods on the ground that the appellants had not declared the description, quantity and value of the inputs contained in such finished products and had instead declared the description, quantity and value of the stock of finished products. They had thereby foreclosed their option available in Sub -rule (1) to Rule 9A. On 12.05.03, long after the deadline prescribed for filing the declaration, the appellants had furnished the duty paying documents to support their claim for credit on the inputs contained in finished goods in stock as on 31.03.03.

(2.) THE Ld. Consultant for the appellants submits that the last date for filing declaration in terms of Sub -rules (1) and (2) of Rule 9A, was extended several times by the Government and finally upto 15.06.2003. Therefore, the appellants were entitled to credit on the basis of duty paying documents in all the cases as they had filed such a declaration in time in terms of Sub -rule (1) of Rule 9A. The Ld. Consultant also submits that there was no proposal in the Show Cause Notice in these cases to deny the credit on the ground of non -declaration of quantity of inputs supported by duty paying documents alongwith declaration in respect of inputs in stock and inputs contained in work in process. Therefore, the orders of the Commissioner (Appeals) affirming the demand on the ground different from that in the proposed Show Cause Notices were liable to be set aside.

(3.) THE Ld. SDR submits that the appellants had the option to avail the credit simultaneously on the basis of the formula as per Rule 9A(3) and on the basis of duty paying documents as per Rule 9A(1). If the assessees had filed the declaration in respect of inputs at various stages in stock as on 31.03.2003 by 15.06.03, credit could not be denied to them.