Customs, Excise and Gold Tribunal - Mumbai
Asian Paints Ltd. vs Commissioner Of Central Excise on 13 January, 1997
Equivalent citations: 1997(93)ELT198(TRI-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. This is an appeal against the Order-in-Original No. 3/Demand/96, dated 22-1-1996 passed by the Commissioner of Central Excise, Vadodara disallowing Modvat credit of Rs. 2,04,324.14 under Rule 57-I of the Central Excise Rules.
2. The appellants are manufacturing Paints, Varnishes, Thinner and Pre-treatment Chemicals. They have manufacturing units in various States in India. All the four manufacturing units are integrated paint manufacturing units with in house facilities to produce various synthetic resins such as Alkyds, maleics, phenolics, acrylic emulsions and other resins which are used captively as media in the manufacture of the finished excisable goods viz. paints and varnishes. The Appellants were availing Modvat credit on various inputs used in the manufacture of their final product namely paints and varnishes. They use such inputs which include pentaerythritol, phthalic anhydride, VEN oils, in their manufacture of final products but through an intermediate resin stage. It is to be stated here that due to multi plant structure the appellant had to transfer resins to other factories after obtaining relevant sanctions under excise law.
3. A Show Cause Notice was given on 20-9-1994 to the appellants calling upon them to reverse the Modvat credit wrongly availed to the tune of Rs. 2,04,324/- inasmuch as they utilised the credit of duty paid on inputs used in a final product viz. Alkyd Resin which was not declared to the proper officer under Rule 57G of the Central Excise Rules hence the said sum was payable under Rule 57-I read with Rule 173Q(1)(bb) of the Central Excise Rules.
4. The appellants filed its reply by its letter dated 12-12-1994 denying its liability. They stated that usage & clearance of the intermediate product has been clearly disclosed in RT 12 Returns, hence the department was in the knowledge of the process employed by the appellants, hence the department cannot take longer period of limitation. They also stated that the clearance has been filed under Rule 57G declaring the product as intermediate one. The lapse is only procedural one. They relied on the decisions of the Tribunal in the cases of Khosla Cast Steel & Alloys v. Collector of Central Excise - 1989 (44) E.L.T. 691 (Tribunal) and Collector of Central Excise v. Vikrant Television (India) Pvt. Ltd. 1991 (51) E.L.T. 128 (Tribunal).
5. The Adjudicating Authority by the impugned order had held inter alia that the lapse of omission was rectified by way of filing a C.L., price lists and submission of RT 12 was not acceptable as C.L. was-for purpose of product intending to be manufactured by factory and it did not clarify as to whether any duty payable on the product classified in the Classification list has to be adjusted from Modvat credit and the inputs as declared had been utilised in the manufacture of the said classified product. Regarding Metal Containers the assessee did not furnish any evidence to substantiate its claim. Longer period of limitation has been taken as the final product was not declared in the declaration filed under Rule 57G which is mandatory. Hence this appeal.
5. Shri Anthony Fernandez, Manager Excise Administrative arguing for the appellant took us through the Show Cause Notice and the appellants reply. In the inputs register filed under Rule 57A, dated 15-11-1990 final product is stated as plastic and article thereof. In column relating to inputs there is a mentions of Alkyd Resins as inputs. In this reply to SCN (Pg. 29 of paper book at para 13). They state as follows :-
We had also filed proper declaration under Rule 57G from time to time indicating the inputs to be used in the manufacture of paints. That of these inputs the once going into resins were declared as inputs to be used in the manufacture of paints "via intermediate resins".
They never stated specifically alkyd resins as inputs when the appellant could state specifically about Alkyd Resin in RT 12 it is not clear why they did not state specifically about the same in declaration filed under Rule 57G.
6. In our view Rule 57G of the Rules, specifically enjoins on the manufacture to specifically in a mandatory way declare the items used as inputs intended to be used in each of the final product as expression shall has been used in the Rule.
7. It is true that the product Alkyd Resin has been mentioned in RT 12 Returns. In our view declaration filed under Rule 57G is a pre-manufacturing requirements. RT 12 is a post-manufacturing statement to be filed by the manufacture under Rule 173G. Both are working in independent fields altogether. Failure to comply with 57G is not a mere lapse in following procedural formalities. It cannot be treated as a mere procedural irregularity.
8. We shall deal with the cases cited by the representative on behalf of the Company. First is the case of Collector of Central Excise v. Indian Aluminium -1992 (59) E.L.T. 168 (Tribunal). In that case assessee had revealed full information to the authorities for the purpose of availing Modvat credit and fault with them was that they did not declare under the main heading aluminium but under heading intermediate product. In that case the problem arose in 1986 not in the year 1990. Moreover in the Indian Aluminium case it was a case of beginning of introduction of Modvat scheme as found in paragraph 8 of the order. In paragraph 6 it is stated that declaration was filed under Rule 57G for the input in the instant case it was not specifically shown about inputs to be used in the final product. Hence we distinguish that case and hold that the case cannot be helpful to the appellant.
9. The next case is British Physical Laboratories v. Collector of Central Excise - 1994 (74) E.L.T. 593 (Tribunal). In that case PCB was shown as intermediate product not only disclosed in the C.L. but in the declaration filed under Rule 57G however, it was not specifically mentioned in column final product. Here in the histants case facts are different. In paragraph 13 of the reply the appellants specifically stated that they did not file declaration under Rule 57G mentioning the intermediate product which distinguishes the appeal on hand with the decision of the Tribunal in BPL case. Hence that case in our view will not be helpful to the appellants even in respect of the decision of the Indo National Ltd. v. Collector of Central Excise -1995 (59) ECR 352 as facts in the said case are different with facts in the appeal on hand.
10. In our view therefore if the argument of the appellant that omission to file declaration under Rule 57G is a mere procedural irregularity is to be accepted then it will amount to violence to language mentioned in Rule 57G. In our view under Excise Law all manufactures attract duty under the Act. Entire provisions relating to Modvat Scheme has been evolved to avoid cascading effect and in the instant case it is not in the initiate stage of Modvat as in the cases decided South Regional Bench.
11. In the facts and circumstances of the ease the appellants were not able to show that they have complied with the provisions of Rule 57G. Hence they are not entitled to Modvat credit.
12. As far as the suppression is concerned it is argued by Shri Gurdeep Singh that non-declaration is a mistake and it is suppression which we have to accept it. When the assessee can file RT12 Returns mentioning the goods why they could not specifically mention it in declaring Rule 57G. It therefore, entitled the department to take longer period of limitation as in our view there is a suppression in this case. The Appeal is dismissed.