1989 (5) TMI 233 - AT - Central Excise

Summary

Issues:
- Appeal against order directing reversal of credit under Rule 57-I of Central Excise Rules, 1944 and imposition of penalty under Rule 173Q.
- Applicability of transitional provisions for availing MODVAT credit under Rule 57H.
- Interpretation of Rule 57G regarding the timing of filing declaration for MODVAT credit.
- Review of findings by Assistant Collector of Central Excise and recourse to Section 35E of the Central Excises & Salt Act, 1944.

Analysis:
1. The appeal was lodged against an order requiring the reversal of credit and imposing a penalty under the Central Excise Rules. The appellants had taken credit for duty paid on cans and barrels used as packing material for fruit products. The issue arose when it was claimed that the appellants did not have the goods in stock when filing for MODVAT credit, leading to the order being contested.

2. The appellants argued that they did have the inputs in stock on the relevant date, even if not recorded in the Stock Ledger Account. They contended that transitional provisions under Rule 57H should apply as they had the goods in stock on the specified date and later entered them in the RG 1 Register. Alternatively, they argued that Rule 57G should apply based on the timing of filing the MODVAT credit declaration and receiving the goods.

3. The Department, represented by the learned D.R., disputed the appellants' claims, stating that evidence did not support the presence of inputs in stock on the specified date. The D.R. left it to the Tribunal to determine the applicability of Rule 57G in the case's circumstances.

4. After careful consideration, the Tribunal found that even if the inputs were not in stock on the specified date, the appellants were entitled to avail MODVAT credit based on the timing of filing the declaration and receiving the goods. The Tribunal emphasized that the Assistant Collector's previous finding in favor of the appellants should not be challenged through parallel proceedings but through Section 35E of the Central Excises & Salt Act, 1944.

5. Ultimately, the Tribunal set aside the impugned order and allowed the appeal, highlighting the application of Rule 57G and the importance of following the proper procedures for challenging official findings. The judgment favored the appellants based on the interpretation of the rules and the sequence of events regarding the filing of declarations and receipt of goods.