1990 (11) TMI 247 - AT - Central Excise

Summary

Issues:
- Appeal against rejection of Modvat credit
- Discrepancy in Tariff Heading of inputs
- Denial of Modvat credit and imposition of penalty

Analysis:
The appeal was directed against the Collector of Central Excise, Bombay's order rejecting the appellant's appeal regarding Modvat credit. The appellants, manufacturers of spring assemblies, declared the input as 'leaves for spring' under Tariff Heading 7308.60. However, some inputs were received with Tariff Heading 7209.20, leading to the denial of Modvat credit by the Department. The Asstt. Collector confirmed a demand of Rs. 1,80,494.47 and imposed a penalty of Rs. 200. The Collector (Appeals) upheld this decision, prompting the present appeal.

During the proceedings, the appellant's advocate highlighted that the modvat declaration clearly described the input, and gate passes showed receipt under both Tariff Headings, with the duty rate remaining the same. The appellant informed the Department about the discrepancy and requested an amendment before the show cause notice was issued. The advocate argued that the denial of Modvat credit and imposition of penalty were unjustified.

On the other hand, the Department argued that since the correct Tariff Heading was not declared, the Modvat credit could be disallowed for inputs received under a different heading. They contended that the demand falling within the time limit should be enforced.

After considering both arguments, the Tribunal found that the appellants declared the only input, steel flat, with detailed description in the modvat declaration. The classification of steel flats by the input suppliers under a different Tariff Heading did not invalidate the declaration as long as the correct description was provided. The Tribunal agreed that the modvat declaration was valid, covering all steel flats of the required quality for manufacturing assemblies. As the Department did not claim that steel flats with different Tariff Headings were ineligible for Modvat benefit, the demand confirmation and penalty imposition were deemed unsustainable. Consequently, the Tribunal allowed the appeal, setting aside the lower authorities' orders.