Customs, Excise and Gold Tribunal - Mumbai
Shells Engineers Pvt. Ltd. vs Collector Of Central Excise on 25 May, 1993
Equivalent citations: 1993ECR541(TRI.-MUMBAI), 1993(67)ELT380(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an Appeal against the order in Appeal No. KW-54/91-BRD, dated 20-8-1991 passed by the Collector of Central Excise, (Appeals).
2. The facts of the case are as follows.
The appellants are engaged in the manufacture of paper mill machinery. They receive the inputs M.S. Profiles and M.G. Cylinder under Modvat scheme. They were also availing exemption under Notification 175/86 and when their clearances exceed the first slab, their final products attract duty, when they simultaneously opt for Modvat credit in respect of duty paid on inputs. They received the inputs - one under G.P.I 6 dated 23-8-1989 and another under G.P.I 9 dated 20-10-1989 and took the credit in respect of both the above receipts on 28-10-1989. However, they filed the Modvat declaration only on 17-11-1989, when they crossed the total exemption limit and their final products attracted duty. On that date itself, they claimed to have utilised the input received under G.P.I 6 dated 23-8-1989 and also utilised the entire credit towards payment of duty. However the Department objected to the availment of credit on the ground that under Rule 57G, no credit can be taken before filing the declaration and obtaining the acknowledgment thereof. The Assistant Collector in the adjudication proceedings, confirmed the demand for reversing Modvat credit taken on the basis of the above two gate passes before filing the declaration and also imposed a penalty of Rs. 500/-. On appeal before the Collector (Appeals), he set aside the penalty but confirmed the demand. The present appeal is against the said order.
3. The main thrust of the argument of the learned advocate for the appellants is that even if credit is not allowable under Rule 57G, they are entitled to the credit being allowed under Rule 57H, which they requested for in their letter dated 15-3-1990. Though such a request was made after issue of the show cause notice dated 5-3-1990, this request ought to have been considered for regularising the credit. He referred to their letter dated 15-3-1990 to point out that on that date, they had the balance of the input covered by GP1 9 dated 20-10-1989 and Modvat credit at least on this input lying in balance is allowable under Rule 57H, which the Assistant Collector ought to have allowed. He also submitted that the item covered by GP1 No. 9 dated 20-10-1989 was lying in balance on the date of their request for allowing credit under Rule 57H even as per their RG 23 A Part I and was also in balance subsequently. He also showed the relevant RG 23 A Part I extracts.
4. Shri Ravinder Jain, the learned JDR, however, contended that they had received the inputs, when they were availing exemption and taken Modvat credit, before coming to the duty paying category. They filed the declaration only on 17-11-1989, when their final products became dutiable. Hence credit taken earlier, when their final products were exempted, cannot be allowed even under Rule 57H.
5. After hearing both the sides, we find that the following factual position is not disputed. They received inputs one under Gate Pass No. 6 dt. 23-8-1989 and another under Gate Pass No. 9 dt. 20-10-1989 and took the credit in respect of both the receipts on 28-10-1989, whereas they filed the Modvat declaration only on 17-11-1989, on which date they crossed the first slab of exemption limit under Notification No. 175/86, on account of which the final products attracted duty liability. It is also not in dispute that the input received under Gate Pass No. 6 dt. 23-8-1989 has been utilised and was not physically available in stock on the date, when they requested for allowing the credit in terms of Rule 57H. The availability of the input lying in stock received under Gate Pass No. 9 dated 20-10-1989 is also reflected in RG 23A Part I. In the context of the aforesaid undisputed factual position, we looked into the provisions of Rule 57G and Rule 57H. We agree with Shri Jain that credit could not have been taken under Rule 57G on 28-10-1989, when they had not filed the declaration, which came to be filed only on 17-11-1989. However, when they had requested for allowing credit under Rule 57H, instead of ordering reversal thereof, as proposed in the show cause notice, this request should have been examined by the lower authorities. On a reading of Rule 57H, it is found that the Assistant Collector of Central Excise may allow credit of the duty on inputs, received by a manufacturer immediately before obtaining the acknowledgment of the declaration and such credit is allowable, if such inputs are lying in stock or received in the factory, after filing the declaration. In this case, since input covered by gate pass No. 6 dated 23-8-1989 is not available in stock, there is adequate justification for denying the credit in respect of this input. However in the case of the input received under gate pass No. 9 dated 20-10-1989, it was very much lying in stock not only on the date of filing the declaration but also on the date, when they sought for permission to regularise the credit under Rule 57H, vide their letter dated 15-3-1990. The argument of Shri Jain that since the credit was taken during the period, when the final products were exempted, it is not permissible even under Rule 57H, does not appeal to us. The said credit was sought to be disallowed in view of the contravention of Rule 57G. However, when that input, which has been received before filing the declaration, was very much available and was lying in stock in the factory for verification by the Assistant Collector as per the appellant's letter dated 15-3-1990 and they have been received immediately before filing declaration, credit on the input received under Gate Pass No. 9 dt 20-10-1989 ought to have been allowed under Rule 57H. Since the said input was lying in stock and would be utilised only in the dutiable final product, objection of Shri Jain is not maintainable. In this view of the matter, we hold that the lower authorities have erred in refusing the credit in respect of the input covered by Gate Pass No. 9 dated 20-10-1989, which is legally permissible under Rule 57H. Accordingly, we order that the demand for Modvat credit should be restricted only in respect of the duty credit on input received under Gate Pass No. 6 dt. 23-8-1989. The demand for reversal of Modvat credit in respect of input received under G.P. No. 9 dt. 20-10-1989 is set aside since this credit is admissible in terms of Rule 57H.