2011 (7) TMI 126 - AT - Central Excise

Condonation of delay - delay in filing declaration - application for taking modvat credit was filed within two months from the date of registration and therefore, period was within the condonable limit - Moreover, in terms of amended rules, once it is established that the capital goods were duty paid and were to be used for the purpose of for which they were brought into factory, procedural lapses should not be come in the way of availment of modvat credit - Since the issue is more than 12 years old, it would not be appropriate to send the matter back for verification of documents - fact that in the declaration filed the details about the invoices, nature of capital goods and duty have been indicated and further, both the lower authorities have not observed that goods have not been received or non duty paid or appellants are not eligible on merits. Under these circumstances, the appellants are eligible for modvat credit and accordingly, the impugned order is set aside and appeal is allowed with consequential relief - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing declaration for availing credit on capital goods under Rule 57-T of Central Excise Rules, 1944.
2. Applicability of amended Rule 57-T and Circular No. 441/7/99-CX dated 23 Feb 1999 to pending cases.
3. Eligibility for modvat credit despite procedural lapses and delay in filing declaration.

Analysis:
1. The appellants received capital goods between 31.03.1994 to 28.05.1994 and filed the declaration to avail credit on 06.7.1994, beyond the stipulated time limit. The Assistant Commissioner refused to condone the delay, leading to the reversal of credit taken and a speaking order against the appellants. The appeal filed by the appellants was rejected based on the delay in filing the declaration as per Rule 57T of Central Excise Rules, 1944.

2. The impugned order was passed on 25.01.1999, and the appeal faced delays due to file reconstruction. However, Rule 57-T was amended, introducing Clause (13) empowering the Assistant Commissioner to allow modvat credit for procedural lapses if certain conditions were met. Circular No. 441/7/99-CX dated 23 Feb 1999 directed Assistant Commissioners to conduct inquiries before issuing show cause notices for procedural lapses. The High Court's ruling in a similar case emphasized applying amendments to pending cases, leading to the eligibility of the assessee for modvat credit.

3. In this case, the dispute centered on the delay in filing the declaration, which was within the condonable limit of two months from the date of registration. The amended rules emphasized that procedural lapses should not hinder availing modvat credit if the capital goods were duty paid and intended for manufacturing purposes. The Tribunal noted the completeness of the declaration filed by the appellants and the absence of evidence suggesting non-receipt of goods or ineligibility on merits. Consequently, the appellants were deemed eligible for modvat credit, and the impugned order was set aside, allowing the appeal with consequential relief.