1992 (8) TMI 181 - Commissioner - Central Excise

Summary

Issues:
1. Disallowance of modvat credit availed by the appellant.
2. Recovery of an equivalent amount.
3. Imposition of penalty under Rule 173Q(1)(bb) of Central Excise Rules, 1944.

Analysis:
The appeal was filed by M/s. Cipla Ltd., Bangalore against the order of the Assistant Collector disallowing modvat credit of Rs. 1,02,485.33 availed by the appellant under Rule 57-I of Central Excise Rules, 1944. The Assistant Collector also demanded an equal sum from the appellant and imposed a penalty of Rs. 2,000 under Rule 173Q(1)(bb) of the said Rules. The dispute arose as the appellant had not properly declared the inputs as required under Rule 57G, leading to the disallowance of the credit. The appellant contended that the Assistant Collector wrongly relied on a decision by the South Regional Bench, CEGAT, Madras, which was factually incorrect. The appellant argued that the rate of duty remained the same regardless of the tariff headings declared, and the proper description of input materials was provided. The West Regional Bench, CEGAT, Bombay, in a separate case, supported the appellant's position that as long as the description of input materials was correct, the modvat declaration should not be considered incorrect based on tariff headings alone.

The Assistant Collector's reliance on the South Regional Bench's decision was found to be misplaced as the appellant had correctly declared the input materials, and the tariff headings discrepancies on some gate passes did not justify disallowing the modvat credit. The appellant provided documentary evidence showing that the tariff classifications on the input gate passes aligned with the declarations made by them. For example, gate passes for various products like cartons, Ephedrine HCL, and Micro Crystalline cellulose matched the classifications provided by the appellant. This evidence demonstrated that the appellant should not be denied modvat credit solely based on differences in tariff classifications on some gate passes. Therefore, the order disallowing the modvat credit, demanding an equivalent amount, and imposing a penalty was set aside, and the appeal was allowed with consequential relief to the appellant.