1989 (12) TMI 191 - AT - Central Excise

Summary

Issues:
Appeal against order of the Collector (Appeals) on MODVAT credit availed without proper declaration under Rule 57G of Central Excise Rules.

Detailed Analysis:

Issue 1: Proper Declaration for MODVAT Credit
The appeal concerns the department's challenge against the Collector (Appeals) order on MODVAT credit availed without filing the required declaration for Aluminium Tubes under Rule 57G of the Central Excise Rules. The respondents availed the credit from Feb. 87 to Sep. 87 without the necessary declaration, leading to a demand of Rs. 63,642.48 confirmed by the Assistant Collector under Rule 57-1(1). The Collector (Appeals) allowed the appeal on the grounds of time bar and lack of authority of the Supdt. to decide on the show cause notice, directing further action by the Collector of Central Excise, Bombay-11.

Issue 2: Interpretation of Rule 57(1) and Section 11A
The department argued that Rule 57(1) governs the recovery of erroneous MODVAT credit specifically, distinct from Section 11A which applies to short-levy, non-levy, or erroneous refund. The absence of a proper declaration for Aluminium Tubes justifies the disallowance of credit, as per the decision in Paro Food Products v. Collector of C.E. The department highlighted the necessity of a specific declaration for each input to claim MODVAT benefits, emphasizing the element of suppression due to the vague description filed by the respondents.

Issue 3: Eligibility for MODVAT Credit
The respondents acknowledged the lack of a proper declaration for Aluminium Tubes but argued that the technicality should not negate their eligibility for MODVAT credit, citing Tribunal decisions condoning formalities under Notification No. 201/79. They contended that denial of credit solely based on non-declaration is unjustifiable, especially when the input is eligible for MODVAT credit, as supported by the decision in S.M. Energee Teknik case.

Judgment and Conclusion
The Tribunal deliberated on the applicability of Section 11A in the absence of a specific time limit under Rule 57(1) for MODVAT credit recovery. It concluded that recovery of erroneous MODVAT credit falls under the purview of Section 11A, aligning with the statutory provisions governing duty recovery. The order of the Collector (Appeals) was deemed legally correct, rejecting the department's appeal. The Collector of Central Excise, Bombay-11, was directed to assess the applicability of the extended period under Section 11A in the case, emphasizing the need for compliance with statutory time limits for duty recovery.