2006 (1) TMI 339 - AT - Central Excise

Summary

Issues:
1. Disallowance of Cenvat credit on 'inputs' received from supplier.
2. Interpretation of Notification No. 29/2000-C.E. (N.T.).
3. Application of the Notification's provisions regarding direct receipt of inputs.
4. Compliance with the transitional measure for manufacturing units shifting from compounded levy scheme.

Analysis:

1. The lower authorities demanded duty from the appellants equal to the deemed Cenvat credit availed on 'inputs' received after transitioning from the compounded levy scheme. The disallowance was based on the alleged non-receipt of inputs directly from the supplier's factory, as required by Notification No. 29/2000-C.E. (N.T.).

2. The Notification specified that it applied to inputs received directly from the manufacturer's factory under an invoice declaring excise duty payment. The Tribunal noted a hyper-technical interpretation by the lower authorities, emphasizing the need to consider the specific facts of the case. The records showed a correlation between the factory and depot invoices, indicating the receipt of goods by the assessee.

3. The Tribunal highlighted the importance of the Supreme Court's judgment in Shriram Vinyl & Chemical Industries v. Commissioner of Customs, Mumbai, indicating that the lower authorities' interpretation might not align with the law. The Notification aimed to facilitate the transition for manufacturing units, allowing them to account for stock and claim input-duty credit accrued during the shift.

4. Considering the strong prima facie case made by the appellants and the transitional nature of the Notification, the Tribunal granted waiver of pre-deposit and stay of recovery. This decision was influenced by previous Tribunal rulings, such as Medopharm v. Collector of Central Excise, Madras, supporting manufacturing units in similar situations.