1988 (1) TMI 236 - AT - Central Excise

Summary

Issues:
- Eligibility for MODVAT credit prior to 19-6-1987
- Interpretation of Rule 57G of the Central Excise Rules
- Applicability of MODVAT Scheme to goods falling under Chapter XVII
- Timing of filing declaration for availing MODVAT credit

Eligibility for MODVAT credit prior to 19-6-1987:
The appeal challenged the denial of MODVAT credit by the Collector of Central Excise (Appeals) upheld by the Assistant Collector, stating the appellants were not entitled to credit before 19-6-1987 despite filing a declaration in March 1986. The appellants argued that as they had included the material in their 1986 declaration, they should be eligible for credit when the MODVAT Scheme was extended in 1987. The Department contended that a fresh declaration was required in 1987 when the Scheme was expanded to cover the material.

Interpretation of Rule 57G of the Central Excise Rules:
The learned Counsel for the appellants highlighted Rule 57G, stating that once a declaration is filed and acknowledged, the manufacturer can avail MODVAT credit on inputs. However, the Department argued that the rule requires a fresh declaration upon any changes in the Scheme's coverage, emphasizing the specificity of the rule regarding the date of acknowledgment for credit eligibility.

Applicability of MODVAT Scheme to goods falling under Chapter XVII:
The Notification No. 177/86 in 1986 did not include goods falling under Chapter XVII for MODVAT credit, rendering the material ineligible at that time. It was only in 1987, with Notification 83/87, that goods under Chapter XVII were covered, making them eligible for credit. The judgment emphasized the necessity of materials being specified as inputs in the Notification under Rule 57A for MODVAT eligibility.

Timing of filing declaration for availing MODVAT credit:
The judgment analyzed Rule 57G, which mandates filing a declaration with the Assistant Collector to avail MODVAT credit on inputs. It was noted that the appellants filed a declaration for Lactose only in June 1987, making them eligible for credit from that date as per the rule. The judgment rejected the argument that inclusion in a prior declaration sufficed for credit eligibility, emphasizing the need for a specific declaration following the material's inclusion in the Scheme.

In conclusion, the judgment upheld the denial of MODVAT credit before 19-6-1987, citing the lack of a fresh declaration in line with Rule 57G and the material's ineligibility under the Scheme in 1986. The decision underscored the importance of adherence to the specific requirements of the Central Excise Rules for availing MODVAT credit, particularly regarding the timing and content of declarations in light of amendments to the Scheme's coverage.