Customs, Excise and Gold Tribunal - Delhi
Tara Chand Naresh Chand vs Collector Of Central Excise on 20 August, 1997
Equivalent citations: 1997(96)ELT561(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from the Order-in-Appeal dated 22-4-1996 passed by the Collector (Appeals), confirming the Order-in-Original passed by the Additional Commissioner. By this order, the Additional Commissioner has confirmed the duty demand of Rs. 85,815/-, Rs. 35,296/-, Rs. 23,385/-, Rs. 26,657/- and Rs. 31,715/- raised under show cause notices dated 26-11-1993, 28-10-1993, 10-8-1993, 3-8-1993 and 12-7-1993 respectively under Rule 57-1 of the Central Excise Rules, 1944.
2. The allegations made against the appellants are that they received duty paid plastic laminated flexible films falling under sub-heading 3920.38 for packing Pan Masala. The said plastic laminated flexible films have not been declared by the party in their declaration dated 7-4-1989. Thus they have wrongly taken Modvat credit and hence the same is liable to be recovered under Rule 57-I read with Section 11A of Central Excises and Salt Act, 1944.
3. Arguing for the appellants, the learned Advocate pointed out to the declaration dated 7-4-1989, wherein they had declared the final product as Pan Masala etc. and shown as input as packing material commonly known as pouches and sub-heading No. indicates "Laminated/Printed plastic Pouch" falling under sub-heading 3920.32, 3920.38, 3923.19, 3923.90 etc. He submits that the authorities have rejected their claim on the ground that the declaration does not specifically refer to plastic laminated flexible films although they admit that they had correctly declared the sub-heading. It is his contention that the plastic laminated flexible films are commonly known as pouches, as in their case the said packing material is not a mere packing material but it has taken a shape of a pouch in view of the same having been laminated and printed with the name of the company, design and other details. Therefore, the description given by them is "commonly known as pouches" is more specific and clear than that of plastic laminated flexible films. It is his contention that there is no ambiguity in understanding the input as a packing material for Pan Masala, is well known and well understood in the market by a common man. That pan masala is packed only in plastic laminated flexible films giving all the details of the goods including name of the manufacturer, contents etc. Therefore, he submits that the authorities have unjustly denied the Modvat credit when in fact, they were granting the Modvat credit since 1989. It is his contention that the authorities should have sought a clarification had the changed opinion on the declaration filed by them. It is his submissions that in a similar case, the Tribunal had taken a view that Modvat credit cannot be denied on minor discrepancy in description of inputs in the declaration and the same is not fault to disentitle the credit. In this regard he cites the judgment of the Tribunal rendered in the case of Collector of Central Excise v. Trident Wraps Ltd. as reported in 1997 (20) RLT 761. He points out from this judgment that it is in like nature and the Tribunal has referred to earlier judgments rendered in the case of Leader Engineering Works v. Collector of Central Excise as reported in 1996 (83) E.L.T. 188 and that of Gautam Cable Industries v. Collector of Central Excise, as reported in 1996 (83) E.L.T. 605. He also referred to judgment rendered in the case of Asil Steel & Industries Ltd. v. Collector of Central Excise, as reported in 1997 (92) E.L.T. 364. He also relied on the judgment rendered in the case of Jain Kaliawala Engg. Works Pvt. Ltd. v. Collector of Central Excise, as reported in 1994 (72) E.L.T. 908, wherein it was observed that in the declaration, the input had not been mentioned as "steel rounds" in Modvat declaration but only Tariff Item 7214.90 of Central Excise Tariff Act, 1985 had been indicated. The Tribunal held that mere omission to mention as 'steel rounds' is not sufficient to disentitle the assessee for the benefit of Modvat credit. He also referred to the judgment rendered in the case of Kelvinator of India Ltd. v. Collector of Central Excise, as reported in 1996 (85) E.L.T. 175, wherein it has been held that minor variation in sub-heading number is not relevant, when the goods fall under the same Chapter heading specified in the Notification.
4. The learned DR relies on the judgment rendered in the case of Paro Food Products v. Collector of Central Excise as reported in 1988 (38) E.L.T. 332, wherein it has been held that for availment of Modvat credit on metal containers, without filing declaration is erroneous and irregular and not con-donable lapse or irregularity.
5. On a careful consideration of the matter, I notice that the citations referred to by the learned DR is not applicable to the facts of the present case as in that case no declaration was filed at all, while in the present case the appellants had been filing the declaration since 1989 and that the declaration has been found to be acceptable. Further the contention raised by the Revenue in the show cause notices is that the description of the input had not been declared. This point has been clearly explained by the assessee, inasmuch as, it has been known that for packing pan masala only a laminated sheet, with all the details of the manufacturer and other details as required by law is printed on the pouch. It has taken a shape of the pouch and that has been described as "commonly known as pouches", while also describing packing material. It has been shown that the said packing material falls under the sub-heading 3920.32 which refers to "Plastic flexible laminate". The description of the input given by the appellants with reference to the final product is quite clear and there is no ambiguity to reject the plea that the appellants have not declared the input. As stated, for pan masala the packing material has to be a pouch and cannot be a mere film. Further it was pointed out that there are legal duty for printing certain details on the pouch before it is sold in the market in terms of Prevention of Food and Adulteration Act. Therefore, a common understanding of the input has to be as "commonly known as pouch" as declared by the party. Any person who buys a pan masala in the market for them it is their common understanding that for pan masala, the packing material is only a plastic laminated pouch. The authorities should have taken a more pregmatic view and a common sense approach in the present matter. It would have been much appreciated if the lower authorities had looked into the judgments of the Tribunal and law standing on this issue. It appears that both the authorities have cursorily disposed of the matter and confirmed the demands without any application of mind and without any reference to the several citations relied by the assessee. This could have been avoided, if the authorities had applied the ratio of the Tribunal's judgments. The credit cannot be denied for a minor violation as held by the Tribunal in the noted judgments. In a case, where Modvat declaration has been filed since the year 1989 and no objection having been raised till 1993, it does not hold sense to say after several years that there has been no proper declaration or that the declaration is not specific and clear. In that view of the matter, the impugned order is set aside and the appeal allowed.