2002 (9) TMI 745 - AT - Central Excise

Cenvat/Modvat - Declaration, delay in filing - Declaration, delay in - Jurisdiction - Show Cause Notice

Summary

Issues:
- Appeal against Commissioner (Appeals) order allowing Modvat credit under Rule 57H
- Validity of Modvat credit taken before filing necessary declaration under Rule 57H
- Jurisdictional issue regarding show-cause notice issuance

Analysis:

1. Appeal against Commissioner (Appeals) order allowing Modvat credit under Rule 57H:
The appeal by the Revenue challenges the Commissioner (Appeals) order granting Modvat credit of Rs. 78,033.89 to the respondents under Rule 57H of the erstwhile Central Excise Rules, 1944. The respondents had filed declarations under Rules 57G and 57H, but took Modvat credit one day before filing the necessary declaration under Rule 57H. The department issued a show-cause notice proposing to disallow the credit due to the untimely filing. The adjudicating authority rejected the objections raised by the assessee and confirmed the duty demand. However, the Commissioner (Appeals) allowed the appeal, leading to the Revenue's challenge.

2. Validity of Modvat credit taken before filing necessary declaration under Rule 57H:
The key issue revolves around the validity of the Modvat credit taken by the respondents before filing the required declaration under Rule 57H. The rule stipulates that credit can be taken on inputs in stock as of the date of filing the Rule 57G declaration. In this case, the credit was taken for inputs in stock as of 9-2-2000, whereas the declarations were filed on 10-2-2000. The Tribunal noted that Rule 57H's provisions were more stringent and independent of Rule 57G, disallowing the credit taken before the filing date. However, it was acknowledged that had the credit been reversed or not taken on 9-2-2000, the respondents could have validly availed the credit on or after 10-2-2000, as argued by the consultant and supported by relevant decisions.

3. Jurisdictional issue regarding show-cause notice issuance:
A jurisdictional challenge was raised regarding the competence of the Superintendent who issued the show-cause notices. The consultant contended that the Superintendent lacked jurisdiction, while the Revenue relied on a Board's Circular to support the Superintendent's authority. The Tribunal found that the Superintendent was competent to issue the notices as the case did not involve elements like fraud or collusion. Thus, the jurisdictional objection was dismissed.

In conclusion, the Tribunal upheld the appeal by the Revenue, setting aside the Commissioner (Appeals) order allowing the Modvat credit under Rule 57H. The decision clarified that the credit taken before 10-2-2000 was not permissible, but the respondents could reverse and re-avail the credit based on the declaration filed on or after that date. The judgment emphasized the importance of adhering to procedural rules while ensuring that legitimate benefits like Modvat credit are not denied due to technicalities.