2007 (10) TMI 527 - AT - Central Excise

Summary

Issues:
1. Denial of input credit for Nylon Powder/Nylon Chips and Ferrite moulding powder due to failure to file a declaration under Rule 57G of the Central Excise Rules, 1944.
2. Appellant sending inputs directly to job worker's factory without bringing them into their own factory.
3. Validity of the declaration filed under Rule 57J in place of Rule 57G.
4. Show cause notice invoking extended period of limitation for the period March 1990 to April 1994.
5. Allegation of suppression or misstatement to evade payment of duty.

Analysis:
1. The appellant was denied input credit for Nylon Powder/Nylon Chips and Ferrite moulding powder as they failed to file a declaration under Rule 57G. A demand of duty and penalty were imposed. However, the appellant had filed a declaration under Rule 57J to their Jurisdictional Asst. Commissioner, informing about sending inputs directly to the job worker's factory. The purpose of the declaration under Rule 57G is to notify the Department about the option to avail credit, which was fulfilled by the appellant through the Rule 57J declaration. The objection raised by Revenue regarding the technical difference between Rule 57G and Rule 57J was deemed unjustified, leading to the allowance of Modvat credit.

2. The inputs were sent by the appellant directly to the job worker's factory, where they were converted into intermediatory products received by the appellant in their factory. The appellant's submission of a declaration under Rule 57J, providing details of the inputs, informed the Revenue about the intention to avail Modvat credit. The denial of credit based on the technicality of the declaration under Rule 57J instead of Rule 57G was considered unjustified, as the purpose of notification to the Revenue was fulfilled.

3. A show cause notice was issued for the period March 1990 to April 1994, invoking an extended period of limitation. The appellant's filing of a declaration under Rule 57J, disclosing all relevant details, indicated no suppression or misstatement to evade duty payment. Consequently, the demand was deemed barred by limitation, aligning with the appellant's argument and leading to the allowance of the appeal on both merits and limitation issues.

4. In conclusion, the appellate tribunal allowed the appeal on the grounds of the appellant's compliance with the notification requirements under Rule 57J, the absence of suppression or misstatement for duty evasion, and the limitation period being invoked incorrectly. The judgment favored the appellant, overturning the denial of input credit and penalty, emphasizing technical compliance and timely disclosure of information to the Revenue.