Customs, Excise and Gold Tribunal - Delhi
Thermal Coatings (P) Ltd. vs Collector Of Central Excise on 5 August, 1992
Equivalent citations: 1993ECR363(TRI.-DELHI), 1993(63)ELT176(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal preferred against the order-in-appeal dated 10-11-1987 passed by the Collector of Central Excise (Appeals), New Delhi.
2. The Modvat Credit has been disallowed for the period April to August 1986, involving an amount of Rs. 1,84,958.06 and Rs. 1,35,390.48 for the months of Sep., Oct. on the ground that the Appellants availed Modvat Credit without filing declaration under Rule 57G of the Central Excise Rules. Arguing for the Appellants Shri Gopal Prasad, learned Consultant submitted that Modvat Credit was introduced for the first time in 1986 and in the beginning of the period neither procedure was known to the party nor was properly guided by the departmental officers. However the Appellants submitted a price list effective from 1-4-1986 in which they had given an endorsement under Modvat claim and there were several correspondence between the department and the appellants on classification list and they had also submitted the list of raw materials involved in the process of manufacture of items as indicated in the attached classification list. He drew our attention to the relevant classification list and the list of raw materials involved in the process of manufactured items filed along with the classification list. He said that this aspect is not in dispute and the Collector (Appeals) has also given a finding that the appellants have filed classification list wherein an endorsement under Modvat Scheme was made but erred in holding that itself cannot be considered as a declaration under Rule 57G. He referred to the observations made by the Collector (Appeals) in the case of Superflex Engineering & Polymers Pvt. Ltd. v. Assistant Collector of Central Excise reported in 1988 (38) E.L.T. 219 that department should adopt liberal view against procedural lapses under a new scheme and guide to the industries. He also relied upon the decision of the Tribunal in the case of Khosla Cast Steel & Alloys Pvt. Ltd. v. Collector of Central Excise, 1989 (44) E.L.T. 691 wherein it was held that Modvat Credit cannot be denied only on the ground that declaration was not filed in proforma since the letter filed by the assessee clearly indicates the input as well as the name of the end-product. He also referred to the Board's Circular issued as per Board's Letter No. 267/87-CX, dated 5-2-1987 that Modvat Credit has to be allowed to the party from the date on which the declaration is filed by them either with the Range Superintendent or the Assistant Collector.
3. On the other hand Shri V.K. Sharma learned SDR for the revenue submitted that Department was justfied in denying the Modvat Credit since the filing of declaration under Rule 57G is a statutory requirement and declaration filed with reference to classification cannot be taken as substantial compliance with reference to Rule 57G. He said that the Tribunal has taken the view in the following cases that availment of Modvat Credit without filing declaration is erroneous and irregular and not condonable lapse or irregularity :
(a) Aluminium Industries Ltd. v. Collector of Central Excise, 1990 (47) E.L.T. 28 (Tribunal)
(b) Usha Martin Industries Ltd. v. Collector of Central Excise, 1990 (46) E.L.T. 392 (Tribunal)
(c) Paro Food Products v. Collector of Central Excise, 1988 (38) E.L.T. 332 (Tribunal)
4. We have carefully considered the submissions made by both sides and perused the records. It is true that declaration is required under Rule 57G to avail Modvat benefit. But in the instant case we find that it was beginning of the introduction of Modvat Scheme and further substantial compliance with that provision inasmuch as the appellants had filed the classification list giving the reference to Modvat Scheme and subsequently there was correspondence with regard to the raw materials and final product between the Department and the assessee. Further RT 12 returns for the above period were assessed and appellants were never informed that they were required to file separate declaration under Rule 57G. The letter given by the assessee dated 21-4-1986 along with the classification lists clearly indicates that the inputs are used in the process of manufacturing and the final product. Declaration is only to enable the department to verify whether input & final product are covered by Modvat Scheme. The decisions cited by the Departmental representative are not applicable for the facts of this case as they were held in different context with reference to different commodity where detailed description of inputs was necessary but only broad description of inputs was given in the declaration. In the facts and circumstances of this case and for the foregoing conclusion we do not find any justification for denying the Modvat benefit. In the view we have taken the appeal is allowed with consequential relief.