Customs, Excise and Gold Tribunal - Delhi
R.S.P. Woollen Mills Pvt. Ltd. vs Commr. Of Central Excise on 19 September, 1997
Equivalent citations: 1998(97)ELT109(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Appeal dated 28-2-1997, by which the Commissioner (Appeals) has confirmed the demand of Rs. 3,85,118/- and penalty of Rs. 25,000/- imposed by the Assistant Commissioner, Saharanpur on the ground that the appellants had taken credit on undeclared inputs and that they had failed to file Modvat declaration for the changed sub-headings of acrylic fibre/acrylic waste.
2. It was contended by the appellants that they had filed declarations under Rule 57G on 28-3-1994, declared the process of manufacture along with declaration under Rule 57E and they had also filed a declaration under Rule 57F(3). It was seriously contended that the declarations and the invoices tallied and that the allegation of taking Modvat credit without declaring is totally not substantiated by the department. However, both the authorities without due verification of the declarations or the invoices or even the case law have rejected their pleas and has confirmed the demand besides imposing penalty.
3. I have perused the impugned orders and the records and heard both the sides. The Learned Commissioner was shown the records including the case law to the effect that the variation in sub-headings in the declarations vis-a-vis invoices is a procedural and technical violation and it does not take away the substantive right conferred on the appellants. However, the Commissioner (Appeals) has merely said that the rulings of the Tribunal did not apply in the given fact of the case and has held that the appellants have committed serious irregularities, without spelling out what the irregularities are and as to how the Tribunal's ruling is not a binding ratio in the facts and circumstances of the case. I notice from the declaration dated 28-3-1994 that the appellants had declared the various types of inputs, which included acrylic staple fibre at Sl. No. 6; acrylic waste yarn at Sl. No. 9 and polyester staple fibre at Sl. No. 16 of the declaration dated 28-3-1994. In these declaration they have also given Chapter heading and sub-heading. The invoices which have been exhibited before the Bench also discloses that the input is acrylic waste. As regards the poly propeline staple fibre, it was contended that this was introduced by Budget of 1994-95 and prior to this Budget, there was no description of this item. The period in issue was June, 1995 to October, 1995 and after the introduction of Budget 1994-95. They have filed a fresh declaration dated 27-12-1995 under Rule 57G(5) as per Notification No. 8/93, dated 2-11-1993 and had sought for condonation of delay and also permission to avail the Modvat. It was specifically contended before the Bench that in terms of Rule 57G(5), the Assistant Commissioner has got powers to condone the delay in such circumstances, if the declaration has been filed within 6 months from the date of taking the credit. It is contended that this procedure has been followed. However, both the authorities have failed to examine the issue in the light of the declarations filed and also in the light of rules and the law laid down by the Tribunal and the higher authorities.
4. In the case of Collector of Central Excise v. Triton Valves Ltd. as reported in 1993 (65) E.L.T. 289, the Tribunal examining the earlier judgment has rejected the Revenue appeal and has held that:-
"It is not disputed by the Department that the inputs received by the respondents were duty paid and were actually used in relation to the manufacture of the end-product. The evidence on record shows that at the relevant time copper billets and copper wire rods fell under the same tariff heading and also sub-heading attracting the same rate of duty. Therefore, in the above factual background when the duty paid inputs have been used in the manufacture of the end-product, the mistake in the input description in the declaration in the above context should be construed to be only a procedural irregularity. There is no revenue implication. It is well settled that credit cannot be disallowed if the description is not exact and is broad based so long as the inputs have been utilised in the final products. It has also been clarified by the Board in their Circular F. No. 263/17/87-CX., dated 9-2-1988 that if the private/statutory records maintained by the assessee show that the inputs have been received and used in the manufacture of the final product and declaration giving broad descriptions/chapters have been filed, as required under Rule 57G, then the credit should not be disallowed. We, therefore, hold that the respondents would be entitled to the Modvat credit and in this view we do not feel called upon to pronounce on the question raised by the respondent in the cross-objection. In the result the appeal filed by the Department and also the cross-objection stand dismissed."
5. As can be seen from the above paragraph of the judgment, the Tribunal in a categorical terms referring to the Board's circular has held that credit cannot be disallowed, if the description is not exact and is broad based so long as the inputs have been utilised in the final product.
6. In the case of Jain Kaliawala Engg. Works Pvt. Ltd. v. Collector of Central Excise, as reported in 1994 (72) E.L.T. 908 in a similar circumstances, the Tribunal held that the photocopies of the gate-passes submitted indicate that many, consignments have been received from manufacturers directly, though show cause notice indicates that the consignments have been received from Stockyard. The Tribunal considering the issue as to whether some consignments were covered by gate passes and whether such consignment as were received under delivery challans/invoices from Hindustan Steel Stockyard were specifically covered subsequently by certificates indicating the duty paid character of these goods and further issue as to whether mention of Tariff Item 7214.90 in the declaration which has been submitted along with the paper book would be sufficient to conclude that the inputs had been declared in the declaration : answered the point in the following terms, which is noted below :-
"Considering that photocopies of the gate passes have been annexed to the Appeal Memo and the averments made that certificates were subsequently obtained from SAIL Stockyard, we consider that it would serve ends of justice if these facts are verified by authorities below. We also hold that since steel rounds were covered under Heading 7214.90 and the fact that it is not alleged that these are not eligible for Modvat, mere omission to mention as 'Steel rounds' would not disentitled the appellants from benefit of Modvat. We accordingly remand the matter to the concerned Adjudicating Authority for de nova consideration of the matter with directions to allow credit in case consignments are covered by gate-passes and such consignments as are received from Hindustan Steel Stockyard are coverd by prescribed certificates evidencing duty paid nature of the goods."
7. In the case of Kelvinator of India Ltd. v. Collector of Central Excise, as reported in 1996 (85) E.L.T. 175, it was held that minor variation in sub-heading number is not relevant when the goods fall under the same Chapter heading specified in the Notification and hence Modvat cannot be denied on the ground of variation in sub-headings. This judgment of the Tribunal referred to earlier judgment as well on this point.
8. In the case of W.S. Industries Pvt. Ltd. v. Collector of Central Excise, as reported in 1994 (74) E.L.T. 960 and Super Collapsible Tube Industries Pvt. Ltd. v. Collector of Central Excise, as reported in 1995 (75) E.L.T. 820, it has been held that wrong mention of sub-heading is not a ground to deny the substantive benefit of Modvat credit. In both these judgments, the Tribunal has taken into consideration the earlier judgment of the Tribunal on this point.
9. On a careful consideration of the material on the recorded and on examination of the declarations field vis-a-vis the invoices, the bench is of the considered opinion that the basis on which the proceedings have been initiated is not sustainable in view of the citations and law laid down above the duty paying nature of the invoices and the description of the goods has also not been disputed. In that view of the matter, the impugned orders are set aside and the matter is referred to the original authorities to verify the duty paying nature of the invoices/description of the goods that the descriptions filed without raising objections with regard to the sub-headings as has been laid down in the earlier judgments and grant the Modvat credit in accordance with law and the rulings noted above. Thus the appeal is allowed by remand to the original authorities.