2004 (9) TMI 526 - AT - Central Excise

Summary

Issues Involved:

1. Eligibility for Modvat credit on felts and wires for the period 1987-1992.
2. Validity of the appellants' declaration dated 7-7-1992.
3. Legality of the suo motu credit taken by the appellants for the period 1987-1992.
4. Compliance with statutory requirements for maintaining records.

Detailed Analysis:

1. Eligibility for Modvat credit on felts and wires for the period 1987-1992:

The appellants filed a declaration on 29-7-1987 to avail credit of duty paid on inputs 'felts and wires' under Rule 57G of Central Excise Rules, 1944, which was rejected by the Assistant Commissioner. This decision was upheld by the CEGAT in Order No. 643/91 dated 22-11-1991. The appellants sought to revisit this decision based on subsequent favorable judgments, but the Tribunal dismissed their ROM application, stating that a subsequent judgment does not constitute an error apparent on the record. The Tribunal emphasized that decisions must be based on the law as it stood at the time of the original judgment.

2. Validity of the appellants' declaration dated 7-7-1992:

The appellants filed a fresh Modvat declaration on 7-7-1992, referencing the favorable judgment in the case of Straw Products Ltd. The Assistant Commissioner refused to acknowledge this declaration, citing the CEGAT's earlier rejection. The Commissioner (Appeals) upheld this refusal. The Tribunal's Order No. 1945/96 dated 18-10-1996, which partially allowed the appeal concerning felts and wires, did not revive the earlier rejected declaration for the period 1987-1992. The declaration dated 7-7-1992 was considered only for the period from its date of filing, not retrospectively.

3. Legality of the suo motu credit taken by the appellants for the period 1987-1992:

The Department issued a show cause notice on 4-9-1997, questioning the appellants' action of taking credit amounting to Rs. 51,56,038/- in February 1997 for the period 1987-1992. The appellants' earlier declaration had been rejected, and no modification was made to the CEGAT's Order No. 643/91. The Assistant Commissioner, in the Order-in-Original dated 19-5-1998, confirmed the disallowance of the credit, stating that the appellants had not maintained the required records and had taken the credit irregularly. The Commissioner (Appeals) upheld this decision.

4. Compliance with statutory requirements for maintaining records:

The appellants failed to maintain the necessary statutory records (RG23A Part-I) for the receipt and utilization of inputs. They only made entries in RG23A Part-II, which was deemed irregular. The Tribunal noted that the appellants had not provided satisfactory explanations for this failure. The suo motu credit taken was therefore considered unauthorized and not in compliance with the Modvat rules.

Conclusion:

The Tribunal concluded that the appellants' action in taking Modvat credit suo motu for the period 1987-1992 was not justified. The declaration dated 7-7-1992 did not revive the earlier rejected claim for the period 1987-1992. The Tribunal upheld the decisions of the Assistant Commissioner and Commissioner (Appeals), confirming the disallowance of the Modvat credit of Rs. 51,56,038/-. The appeal was rejected, affirming that the appellants were not entitled to the credit for the period in question due to non-compliance with statutory requirements and the absence of a valid declaration for that period.