Judgment:
1. After hearing both sides for some time, we find that it is possible to dispose of the appeal at the stay stage itself. Accordingly, we dispense with the requirement of pre-deposit and proceed to hear the main appeal.
2. Shri V. Sridharan, learned Advocate appearing for the appellants states that the order in original has been passed without issue of Show Cause Notice. In this context he cites the decision of the Apex Court in the case of Metal Forgings v. U.O.I. - 2002 (146) E.L.T. 241 (S.C.).
He further states that the appellants were eligible to modvat credit as per the amendment made in the Notification No. 21/99 w.e.f.01/03/2000.
He states that the appellants verified the stock of inputs and intimated the same to the department. Yet, the department has denied the credit on the said inputs which the appellants are entitled to under the amended provision of the aforesaid notification through the order in original which is in the form of a letter.
3. He further states that under Rule 57H, the appellants were required to file a declaration stating the stock of inputs lying in the factory and it was open to the Department to make any verification in regard to the stocks. He also contends that the Department could have taken action to reverse the credit taken only within a period of six months, if at all, but in this case such action has been taken after a lapse of one year.
4. We have heard Shri M.H. Sheikh, learned J.D.R. Three is no satisfactory explanation from the Department as to why the entire credit of duty on the stock of inputs required to be allowed under the amended provisions is being denied to the appellants. It is not also the case of the Department that the quantity of inputs reported to be lying in stock was either not in existence or found to be less. As such, we are of the view that the impugned orders passed by the lower authorities cannot be sustained and we set aside the same. The appeal is allowed.