Clarificatory stock declaration cannot bar deemed Cenvat credit, and pre-deposit of duty and penalty was dispensed with.

A clarificatory letter that refers back to earlier stock declarations does not amount to a fresh declaration for denying deemed Cenvat credit. The appellant had already filed stock declarations before the later letter, and the letter merely sought clarification on the formula for valuing stock under the notification. On that basis, the denial of credit was not justified at the stay stage, and the demand did not warrant insistence on pre-deposit of duty and penalty. The issue was treated as being in favour of the assessee, with recovery stayed pending final hearing.

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Issues: Whether the letter dated 7-7-2003 was a fresh declaration so as to bar the appellant from availing deemed Cenvat credit, and whether pre-deposit of duty and penalty should be dispensed with.

Analysis: The appellant had already filed stock declarations on 1-4-2003 and 25-5-2003. The later letter dated 7-7-2003 merely sought clarification regarding the formula for arriving at the value of goods in stock for the purpose of deemed credit under the notification. It was not a fresh declaration and could not be treated as time-barred. On that basis, the denial of credit was not justified at the stay stage, and the demand did not warrant insistence on pre-deposit.

Conclusion: The issue was answered in favour of the assessee. The condition of pre-deposit of duty and penalty was dispensed with and recovery was stayed pending hearing of the appeal.

Ratio Decidendi: A clarificatory letter referring back to an already filed stock declaration does not amount to a fresh declaration, and deemed Cenvat credit cannot be denied on that footing at the stage of considering pre-deposit.

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