2016 (11) TMI 638 - AT - Central Excise

MODVAT credit - declaration for input as required under Rule 57G of erstwhile Central Excise Rules, 1944 - whether recovery of credit on the ground that the input packing material viz. Bitumen Drums was shown against the column final product , instead of input , justified? - Held that - the Appellant declared Bitumen drum under the category final product , instead of as input . It is the contention of the Appellant that they are engaged in the manufacture of petroleum products and not drums , hence, the bitumen drum, which was by mistake shown as their final product, should be considered as an input used for packing of bitumen, a fact never disputed by the Revenue. We find force in the contention of the Appellant - appeal allowed.

Summary

Issues:
Denial of MODVAT Credit due to incorrect declaration of input material.

Analysis:
The case involved an appeal against the Order-in-Original passed by the Commissioner (Appeals) regarding the denial of MODVAT Credit to the Appellant for availing credit on input packing material, specifically 'Bitumen Drums'. The Appellant, engaged in the manufacture of petroleum products, mistakenly declared the 'Bitumen Drums' under the column 'final product' instead of 'input' in the necessary declaration as required under Rule 57G of the Central Excise Rules. The Revenue issued a demand notice for recovery of credit due to this incorrect declaration. The Commissioner (Appeals) upheld the denial of credit, leading to the present appeal.

The Appellant argued that the declaration error was inadvertent and that they had received and used the Bitumen Drums as inputs in their manufacturing process, which was not disputed by the Revenue. The Appellant contended that they had complied with all substantive conditions of the MODVAT rules and referred to subsequent circulars, amendments, and Tribunal decisions supporting their position. The Appellant emphasized that the Bitumen Drums should be considered as inputs used for packing bitumen, despite the incorrect classification in the declaration.

Upon examination of the declaration and considering the Appellant's manufacturing activities, the Tribunal found merit in the Appellant's argument. The Tribunal noted that the only reason for denying MODVAT Credit was the incorrect declaration of the Bitumen Drums as a final product instead of an input. Given that the Appellant's use of the drums as inputs was established and undisputed, the Tribunal set aside the impugned order, allowed the appeal, and granted consequential relief as per the law. The Tribunal emphasized that the Appellant's manufacturing focus on petroleum products justified considering the Bitumen Drums as inputs, leading to the favorable decision in the appeal.