1990 (12) TMI 235 - AT - Central Excise

Summary

Issues:
- Whether appellants are entitled to MODVAT credit for scrap clearance before filing declaration under Rule 57G?
- Interpretation of Rule 57H(l)(ii) in the context of MODVAT credit eligibility.
- Application of transitional provisions for MODVAT credit in the case of ship breaking operations.
- Compliance with Central Excise law regarding manufacturing operations without a license.

Analysis:
1. The appeal concerned the entitlement of the appellants to MODVAT credit for clearing scrap before filing the declaration under Rule 57G. The appellants imported a vessel for ship breaking, commenced operations without a Central Excise license, and faced charges for violations of Central Excise law. The Collector held that MODVAT credit could only be granted for clearances made after filing the declaration, not for unauthorized clearances before that date.

2. The appellants argued that despite starting operations before filing the declaration, their actions were due to ignorance and not intentional violations. They cited a Tribunal decision in a similar case to support their claim for MODVAT credit under Rule 57H(l)(ii) for inputs received before filing the declaration.

3. The Departmental Representative acknowledged the similarity between the present case and the referenced Tribunal decision, indicating a lack of distinction in the facts.

4. The Tribunal analyzed Rule 57H(l)(ii) regarding MODVAT credit eligibility for inputs used in manufacturing final products cleared after a specified date. The Tribunal emphasized the importance of the ship as a specified input for MODVAT credit and the applicability of Rule 57H in allowing credit for inputs used before obtaining the dated acknowledgement.

5. The Tribunal further interpreted the term "immediately before" in Rule 57H(l)(ii) to mean preceding the date, citing legal references for clarification. It concluded that the appellants met the criteria under Rule 57H and were entitled to MODVAT credit for duty paid on the input, allowing the appeal.

6. The decision highlighted the Tribunal's consistent application of Rule 57H and the intention behind the transitional provisions to benefit manufacturers even after the specified date. The ruling emphasized the appellants' compliance with the rule's requirements and granted them the MODVAT credit for the duty paid on the input used in manufacturing the final product.

In conclusion, the Tribunal allowed the appeal, affirming the appellants' entitlement to MODVAT credit for the duty paid on inputs used in manufacturing final products cleared after the specified date, as per Rule 57H(l)(ii) and the transitional provisions.