2001 (5) TMI 664 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit on the grounds of late filing of declarations under Central Excise Rules, 1944.
2. Denial of Modvat credit due to the existence of intermediate products falling under Chapter 54 during the manufacture of final products falling under Chapter 59.

Analysis:

1. Issue 1 - Late Filing of Declarations:
The authorities below denied Modvat credit to the appellants citing delay in filing declarations under Rules 57G and 57T of the Central Excise Rules, 1944. The appellant argued that declarations were filed promptly after goods' receipt, with delays ranging from three to thirteen days. The appellant contended that the Assistant Commissioner had the power to condone delays within specified periods. The delays were attributed to government holidays and late document receipt. The Tribunal agreed with the appellant, stating that the Assistant Commissioner should have exercised discretion to condone the delays, especially since they were minimal and verifiable. The matter was remanded for reconsideration.

2. Issue 2 - Existence of Intermediate Products:
The denial of Modvat credit due to the existence of intermediate products under Chapter 54 during the manufacture of final products under Chapter 59 was challenged. The appellant argued that Rule 57R(2) allows credit even if intermediate products exist. However, the annexure to Rule 57Q excluded woven fabrics falling under Chapter 54 during the relevant period. The Tribunal noted that the appellant's plea regarding the diversified use of capital goods was not raised before the authorities below. Consequently, the matter was sent back for consideration of this plea. Additionally, the Tribunal directed the Assistant Commissioner to assess whether the intermediate goods were marketable and excisable, as contended by the appellants.

In conclusion, the appeal was allowed by way of remand for reconsideration of both issues. The Assistant Commissioner was instructed to review the denial of Modvat credit in light of the observations made by the Tribunal and to consider the appellants' contentions regarding the diversified use of capital goods and the marketability of intermediate goods.