Customs, Excise and Gold Tribunal - Delhi
C.C.E. vs Mahalakshmi Steel Rolling Mills (P) ... on 7 June, 1996
Equivalent citations: 1996(87)ELT427(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The Revenue is aggrieved with the impugned order dated 24-3-1995 passed by the Collector (Appeals), Chandigarh. The assessee is engaged in the manufacture of Iron and Steel Products falling under Chapter 72 of the Schedule annexed to the Central Excise Tariff Act, 1985 and were availing Credit of duty paid on inputs used in or in relation to the manufacture of finished products available under Section "AA" of Chapter V of the Central Excise Rules, 1944. They filed declaration under Rule 57G of the Rules declaring Billets as inputs, on 13-8-1993 and obtained the dated acknowledgment. The department found that the assessee took the Modvat Credit of Rs. 53,810 on 12-8-1993 on billets weighing 53.810 MT said to have been lying in their factory premises immediately before filing of the declaration and without making any application to the adjudicational Assistant Collector of Central Excise, seeking permission under Rule 57H of the Rules. The propriety of which was objected to by the Department. Therefore, proceedings for recovery of the said credit were initiated and a regular show cause notice was issued and the same was adjudicated by the Deputy Collector (Preventive). On appeal, the Learned Collector applying the ratio of the Tribunal's judgment rendered in the case of EMC Steelal Ltd. v. Collector of Central Excise as reported in 1993 (44) E.C.R. 215 allowing the credit of the respondents with consequential relief by setting aside the order-in-original. The Revenue being aggrieved with in this appeal are contending that the ratio of the said judgment is not applicable in the present facts of the case as in the citation the Tribunal had found the party having filed their Modvat declaration and only violation found was that the party had not filed prior permission from the adjudicational Assistant Collector. Therefore, in the facts of that case the Tribunal had held that the contention of prior permission was not prescribed in the Rule and all that is necessary for the Assistant Collector's satisfaction is fulfilment of one of the conditions stated in the Rule and as the party had fulfilled the first condition itself; and in the absence of any stipulation for prior permission in the Rule. Therefore, the Tribunal had found that the impugned order is unsustainable. The Revenue submitted that in the present case no such declaration had been filed and hence the ratio is distinguishable and not applicable to the facts of the present case.
2. The Learned DR arguing for the Revenue reiterated the submissions as recorded in the appeal memo.
3. The Learned Advocate submits that the ratio is not distinguishable as the filing of declaration in transitional provisions of Rule 57H is not mandatory and so also to obtain prior permission for taking the Credit of the duty paid on inputs received by the manufacturer immediately before obtaining dated acknowledgment of the delcaration made under Rule 57G. All that was required in the transitional provisions of Rule 57H was for the Assistant Collector to satisfy that:
(a) such inputs are lying in stock, or are received in the factory, on or after the 16th day of March, 1995, or
(b) such inputs are used in the manufacture or packing of final products which are cleared from the factory on or after the 16th day of March, 1995, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification.
4. Therefore, the Learned Advocate submits pointing out to the proviso to Rule 57H that there was no allegation from the department pertaining to nature of the violations of the Rule 57H except the fault that the assessees not having waited for prior permission.
5. On a careful consideration of the plea taken by the Revenue, we are of the considered opinion that the judgment relied by the Collector is right and is required to be followed in the present case. The finding given by the Tribunal in paras 8 and 9 of the said judgment is noted herein below :-
"8. The Assistant Collector has taken the view that the taking of the MODVAT Credit by the appellants on 15-4-1986 was irregular as they failed to obtain prior permission of the Assistant Collector as required under Rule 57H. We do not notice any stipulation in Rule 57H for obtaining prior permission of the Assistant Collector in such cases. All that is necessary for the Assistant Collector's satisfaction is the fulfilment of one of the two conditions stated in the Rule and, as we have seen, the appellants had fulfilled the first condition itself. In the absence of any stipulation for prior permission in the Rule we are unable to sustain the impugned order.
9. A further point was made that after assessing the RT-12 returns of the appellants and not responding to their request for availing of the benefit of the transitional provisions as contained in Rule 57H, it was not open for the authorities to raise a demand after more than two years without any allegation of wilful misstatement, collusion or suppression in terms of the proviso to Section 11A which, it is claimed was applicable to the demands issued under Rule 57-1. We do not think it necessary, for us to go into this aspect because the appeal can be decided on the other plea which we find is acceptable under the law."
6. In the present case, the appellants have opted for availing the facility of the Modvat Credit on their inputs under Rule 57A of the Central Excise Rules, while opting for the first time for the Modvat without filing their Modvat declaration under Rule 57G on 13-8-1993 on dated acknowledgment. The party was holding the stock of inputs i.e. Billets weighing 53.810 MTs with them prior to the filing of Modvat declaration which was received in Division Office, Patiala on 13-8-1993. The department's case is that they are entitled to avail Modvat with effect from 13-8-1993 and the taking the credit on the said inputs in their RG-23 Part-I Register vide Entry No. 1 dated 12-8-1993 i.e. prior to the filing of Modvat Declaration. It is not disputed in this case that the final inputs were utilised for the manufacture of the final goods and the final goods were removed only after the assessee obtaining dated acknowledgement. The department is finding fault in taking the entry of the said inputs one day prior to the dated acknowledgment. The Rule 57H itself makes it clear that notwithstanding anything contained in Rule 57G, the Assistant Collector may allow the credit of the duty paid on inputs received by the manufacturer immediately before obtaining the dated acknowledgement of the declaration under the said Rule provided he has satisfied with regard to the criterion stipulated in the said Rule. There is no dispute that the assessee has satisfied the criterion. As held by the Tribunal, it is not for the assessee to obtain prior permission from the Assistant Collector, so long as taking of the credit satisfies the criterion laid down with regard to the satisfaction of the Assistant Collector, then the Credit taken by the assessee cannot be found fault with. It is a matter of commonsense also that if the assessees were to wait for the prior permission, the result would be that the assessee has to endlessly wait for prior permission which results in stoppage of production and causing serious consequences and losses to the assessee. Therefore, the transitional provisions under Rule 57H gives laxity for the assessee to utilise the inputs lying in stocks or received in the factory after filing the declaration made under Rule 57G or such inputs are used in the manufacture of final products which are cleared from the factory on or after the first day of March,1987. In this case the inputs were lying in stock and such inputs have been utilised in the manufacture of final product and also that the final products have been cleared only after the dated acknowledgement hence there is no violation of Rule 57H calling for recovery of the Modvat Credit already utilised under Rule 57-1 of the Central Excise Rules, 1944. The Learned Collector has, therefore, rightly applied the ratio in the present case. There is no merit in this appeal, hence the same is rejected.