1991 (4) TMI 258 - AT - Central Excise

Modvat Credit available under Rule 57G itself if inputs received after filing the declaration

Summary

Issues:
- Appeal against Order-in-Appeal allowing MODVAT credit
- Compliance with Rule 57H of Central Excise Rules for MODVAT credit eligibility

Analysis:
The judgment involves an appeal against an Order-in-Appeal allowing MODVAT credit to the Respondents. The Department contested this decision, arguing that the Respondents failed to comply with Rule 57H of the Central Excise Rules, rendering them ineligible for the credit. The undisputed facts revealed that the Respondents filed a MODVAT declaration for certain inputs but took credit only after a delay. The Department contended that since the stock of inputs should be lying as per Rule 57H, and the Respondents did not seek permission from the Assistant Collector as required, they should not be eligible for the credit. The Collector (Appeals) had ruled in favor of the Respondents, prompting the Department to appeal.

The legal representative for the Department, Shri Naik, argued that the Respondents should have followed the provisions of Rule 57H, which necessitate applying to the Assistant Collector for permission to take credit for stock lying with them before filing the declaration. As the Respondents did not adhere to this requirement, Shri Naik asserted that they were not entitled to the MODVAT credit. The Department sought to set aside the Order of the Collector (Appeals) and reinstate the Asst. Collector's decision confirming the demand for ineligible MODVAT credit.

Upon hearing Shri Naik's arguments, the Judge noted that Rule 57G of the Central Excise Rules mandates obtaining a dated acknowledgement before taking credit for inputs. The Judge highlighted that the acknowledgment was obtained on 29-6-1987, while the credit was availed on 30-6-1987, meeting the procedural requirement. Shri Naik contended that Rule 57H should apply, requiring permission from the Assistant Collector for credit. However, the Judge emphasized that Rule 57H allows credit for inputs received before obtaining the acknowledgment if they are in stock or received after filing the declaration. Since the inputs were eligible under the MODVAT Scheme and the credit was taken post-declaration, the Judge concluded that the objection raised by the Department was unsustainable. Consequently, the Judge dismissed the Revenue's appeal, upholding the Order-in-Appeal in favor of the Respondents.

In summary, the judgment delves into the intricacies of MODVAT credit eligibility under Rule 57H of the Central Excise Rules, emphasizing compliance with procedural requirements and the entitlement to credit for inputs under specific circumstances. The decision underscores the importance of following statutory provisions while interpreting the rules governing excise duties and credits, ultimately upholding the Order-in-Appeal in favor of the Respondents.