2002 (5) TMI 622 - AT - Central Excise

Summary

Issues:
Availing Modvat credit for Light Liquid Paraffin IP described as White Mineral Oil, denial of credit by Asst. Commissioner, imposition of penalty, appeal before Commissioner (Appeals), justification for denial of credit, interpretation of classification of the product, relevance of supplier clarification, applicability of previous Tribunal decisions.

Analysis:
The case involved the appellants availing Modvat credit for Light Liquid Paraffin IP, described as White Mineral Oil in supplier invoices. The appellants sought clarification from the authorities regarding the need for a separate declaration due to the discrepancy in product description. The Superintendent directed the appellants to file a fresh declaration, which they did. However, a show cause notice proposing denial of credit for White Mineral Oil was issued, leading to the imposition of penalty by the Asst. Commissioner, a decision upheld by the Commissioner (Appeals).

The appellant contended that both descriptions referred to the same product falling under the same classification, supported by a certificate from the manufacturer confirming the equivalence of White Mineral Oil and Liquid Paraffin IP. The appellant's arguments were based on the premise that the difference in product description should not result in the denial of credit. The appellant's representative cited previous Tribunal decisions supporting the position that Modvat credit should not be denied based on discrepancies in product descriptions.

On the other hand, the Revenue argued that the Asst. Commissioner correctly denied credit as Light Liquid Paraffin IP was not declared by the appellant, distinguishing it from White Mineral Oil. The Revenue's position was that the denial of credit was justified based on the specific product descriptions provided.

Upon review, the Tribunal found that the appellants had declared Light Liquid Paraffin IP falling under a specific classification, while the invoices described the product as White Mineral Oil under the same classification. The Tribunal noted that the appellants sought clarification from suppliers, who confirmed the equivalence of the products. The Tribunal concluded that denial of credit was unwarranted, considering the proactive steps taken by the appellants to rectify the discrepancy by filing a fresh declaration promptly. The Tribunal also highlighted that the initial letter seeking clarification could be deemed as a declaration. Consequently, the Tribunal set aside the previous order, allowing the appeal and granting relief to the appellants.