2007 (2) TMI 457 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit and imposition of penalty for availing credit without filing declaration under Rule 57H of Central Excise Rules.

Analysis:
The appellant, engaged in manufacturing medicines, filed a necessary declaration under Rule 57G of Central Excise Rules along with an application to condone the delay. The delay was condoned, and subsequently, a declaration under Rule 57H was filed for duty paid on inputs in stock before taking credit. A show cause notice was issued for denial of credit, which was dropped by the adjudicating authority. The Revenue's contention was that there was no provision to condone the delay in filing the declaration under Rule 57H, and the declaration should precede taking credit to verify inputs in stock.

The appellant argued that the claim of credit was admissible under Rule 57H if a declaration under Rule 57G had been filed. The appellant maintained that credit was taken after filing the necessary declaration and that the Revenue did not dispute duty payment or the quantity mentioned in the declaration. The appellant contended that since credit was taken after filing the declaration under Rule 57H, the demand was not sustainable.

The Revenue's position was that the appellant filed a declaration under Rule 57G for credit used in manufacturing the final product and subsequently filed a declaration under Rule 57H for inputs in stock. The dispute centered on credit for inputs in stock when opting for the Modvat scheme. Rule 57H allowed manufacturers to take credit for inputs in stock after filing the necessary declaration. The appellant filed the declaration before taking credit, and as the duty payment and quantity were not disputed, the impugned order denying credit was set aside, and the appeal was allowed.

In conclusion, the Tribunal found that the appellant had followed the prescribed procedure by filing the necessary declarations before availing the credit on inputs in stock. As the duty payment and quantity were undisputed, the denial of credit based on a perceived delay in filing the declaration was deemed unsustainable, leading to the allowance of the appeal.