2005 (7) TMI 465 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit wrongly taken by the appellant.
2. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.

Analysis:
1. The appellant, a manufacturer of wound stators, availed Modvat benefit on duty paid inputs. The Commissioner disallowed Rs. 19,34,940/- Modvat credit wrongly taken, imposed a penalty of Rs. 50,000 under Rule 173Q, and ordered interest payment. The denial was based on two grounds:
- The first ground was the failure to file a declaration under Rule 57G before availing credit on cleated stamping and electrical stamping. The appellant argued that the declaration filed specifically mentioned laminations under Chapter Heading 83.12, allowing credit on other items based on the broad description. However, the credit was rightly denied for cleated stampings and electrical stampings.
- The second ground for denial was incomplete invoices lacking transport details. The appellant contended that the delivery challan contained necessary particulars. The Tribunal held that the delivery note sufficed for compliance, allowing the Modvat credit of Rs. 12,20,164/-.

2. Regarding the denial of Rs. 7,14,776 credit, the Tribunal noted the failure to mention inputs in the initial declaration. Only in a subsequent declaration were cleated stampings and electrical stampings specified under Chapter Heading 85.03. The lower Appellate Authority correctly held that these inputs should have been declared under Chapter 85.03, not as laminations, and non-declaration was not a procedural lapse. Thus, the credit denial was upheld. However, for the Rs. 12,20,164/- credit, even though invoices lacked transport details, the delivery notes provided the necessary information, meeting compliance requirements. Consequently, the appellant was deemed eligible for this credit.

3. The Tribunal found no grounds for imposing a penalty and set aside the Rs. 50,000 penalty imposed by the Commissioner. Thus, the appellant was relieved of the penalty obligation, concluding the judgment.