2003 (12) TMI 561 - AT - Central Excise

Summary

Issues: Modvat credit denial due to incorrect declaration under Rule 57A instead of Rule 57Q.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue revolves around the denial of Modvat credit to the appellants based on the incorrect filing of declarations under Rule 57A instead of Rule 57Q. The appellants claimed credit for duty paid on capital goods, but the authorities denied it due to the discrepancy in declaration filing. The appellants argued that although Rule 57A was incorrectly quoted in some declarations, the description of capital goods was accurate, and this error should not warrant credit denial, citing precedents where similar irregularities did not result in denial of credit.

The learned DR contended that filing the correct declaration is not a mere formality, and the denial of credit was justified due to the non-compliance with declaration rules. However, the tribunal noted that the error in quoting Rule 57A instead of Rule 57Q, while the description of capital goods was correct, should not lead to the denial of substantial Modvat credit, especially when no other issues regarding duty payment or use of capital goods were raised.

Furthermore, the tribunal highlighted the government's liberalization of Modvat rules through Notification 7/99-C.E. (N.T.), dated 9-2-1999, indicating that pending cases would be covered by the new provisions. In the interest of justice, the tribunal decided to remand the matter back to the Deputy Commissioner of Central Excise for a fresh examination, including condoning the non-filing of declarations and considering aspects like depreciation under the Income-tax Act. The orders of the lower authorities were set aside, and the matter was remanded for a new determination of Modvat credit admissibility, affording the appellants an opportunity to present their case and ensuring compliance with the law.

Ultimately, the appeal was allowed through a de novo remand, emphasizing the importance of correct declaration filing for Modvat credit and the need for a thorough re-examination of the issue to ensure justice and compliance with the law.