Customs, Excise and Gold Tribunal - Delhi
E.M.C. Steelal Ltd. vs Collector Of Central Excise on 28 May, 1992
Equivalent citations: 1993(44)ECR215(TRI.-DELHI)
ORDER N.K. Bajpai, Member (T)
1. This is an appeal against the order of the Assistant Collector of Central Excise, Allahabad confirming a demand of Rs. 35061.90 on account of MODVAT credit. Out of this, a sum of Rs. 33,587.30 was taken as MODVAT credit on 15th April 1986 in terms of the transitional provisions of Rule 57-H of the Central Excise Rules, 1944. Another amount of Rs. 1474.60 has been demanded in respect of certain inputs which were received short. The Assistant Collector's order has been upheld by Collector of Central Excise (Appeals), New Delhi and hence this appeal to the Tribunal.
2. Briefly stated, the facts are that the appellants had filed a declaration under Rule 57-G on 24.3.1986 to the Superintendent of Central Excise. On the advice of the latter, a copy of the declaration was submitted to the Assistant Collector, Allahabad on 11.4.1986, which was duly acknowledged. Besides, the appellant requested the Assistant Collector by a letter, dated 13.4.1986 to allow credit of duty on-inputs received durim> the transitional period between 1.3.1986 to 31.3.1986 enclosing a statement of the stock of inputs. This request was made under Rule 57-H and, without waiting for the perm is sion of the Assistant Collector, the appellants utilised the credit of duty of Rs. 33,587.30 on 15th April 1986 in their RG-23A Part II Register. The appellant's claim is that the credits taken in the Register were duly verified by the Sector Officer and he had signed in the Register in token of having verified the entries therein. Thereafter the appellants submitted RT-12 Returns for the months of March and April, 1986 along with copies of RG-23A Parts I & II Registers on the due dates of submission and these were also assessed finally on 17.8.1986 and 3.11.1986 respectively without any objection. It was only on 15.6.1988 that they received a demand notice alleging that they had taken credits without prior permission of the Assistant Collector for the transitional period from 1.3.1986 to 31.3.1986. The Assistant Collector held that prior permission was required to be taken under Rule 57-H and confirmed the demand. Collector (Appeals) upheld this order.
3. We have heard Shri M.M. Sharma, the learned Consultant for the appellants and Shri G. Bhushan, the learned SDR.
4. The respondent-Collector has filed two cross objections. In the first one, it has been claimed that the credit of duty paid on inputs lying in stock or received before filing the declaration was not admissible as it was to be availed of only on the permission of the Assistant Collector and such permission was to be granted on verification of the inputs and the covering duty paying documents. It is also staled in this cross objection against Paras 25 to 27 of the appeal that the appellants have totally withheld the information and documentary evidence about the related duty paying documents for the inputs. In the absence of such documents it was impossible for the Assistant Collector to adjudge the admissibility of the credit in view of the provisions of Sub-rule (2) of Rule 57-H under which credit of duty paid before 31.1.1986 for such inputs was not admissible. It is further submitted in the Cross Objection that the credit of duty amounting to Rs. 33,587.30 involved on one such input, namely, M.S. Plates, was not admissible as it was without any duty paying documents since the inputs were received only under the chal-lans issued by the stockyard of Steel Authority of India Ltd. At the relevant time the challans of Steel Authority were not treated as duty paying documents.
5. As regards the claim for credit of Rs. 1474.60 for duty involved on inputs re ccived short, it is stated in the Cross Objection against para 2.8 that it is totally untenable. The credit of duty paid on inputs under Rule 57A is admissible only for those in puts which are used in or in relation to the manufacture of final products. This is not possible for inputs not received. The credit of duty involved on inputs received in excess is also not admissible as the same would be received without payment of duty.
6. Rule 57-H is a transitional provision and provides for allowing of credit of daily paid on inputs received by a manufacturer immediately before obtaining the dated acknowledgement of the declaration made under Rule 57-G if the Assistant satisfied that
(a) such inputs are lying in stock or are received after filing the declaration, or
(b) such inputs are used in the manufacture of final product which are cleared from the factory on or after 1st March 1986.
7. It appears from the facts of the present case that the appellants had written to the Assistant Collector, Central Excise, Allahabad on 13.4.1986 to allow credit of duty on inputs received during the transitional period between 1.3.1986 to 31.3.1986 along with the statement of such stock. Their declaration under Rule 57-G was filed on 24.3.1986. Thus some of the inputs were received immediately before filing the declaration (i.e. those received before 24.3.1986) and some were received after filing the declaration (i.e. those received between 24.3.1986 and 31.3.1986). Thus, condition (a) has been fulfilled in this case and the appellants were eligible for the benefit of the transitional provisions.
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 57-H. We do not notice any stipulation in Rule 57-H 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 57-H, 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 is 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.
10. As regards the demand for Rs. 1474.60 in respect of inputs received short, it appears from the appeal that the appellants have not strongly contested the demand. They have only stated that negligible shortages of material cannot be taken into account without considering the excess of slock received. It has been contested by the respondents in their Cross Objections that credit of duly paid on inputs under Rule 57-A is admissible only for those inputs which are actually used in the manufacture of the final product. Hence there could be no question of taking credit for inputs which are not received by the manufacturers. Hence the demand for Rs. 1474.60 appears to have been validly made.
11. As regards the points taken in the Cross Objection, it is apparent from the record that no allegation of withholding information and documentary evidence about duly paying documents for the inputs was made in the show cause notice; nor is there a finding to that effect recorded in the impugned orders. In these circumstances, it is not permissible for the respondents to take this objection at this stage and the objections are accordingly rejected.
12. In view of the foregoing, we set aside the impugned order and allow the appeal so far as the demand for Rs. 35061.90 is concerned. So far as the demand for Rs. 1474.60 is concerned, the demand is confirmed and the appeal is rejected. Both the cross objections are disposed of in the above terms. In view of our order allowing the appeal on the interpretation of Rule 57-H itself, it is not necessary for us to go into the case law cilcd by the learned Counsel for the appellants.