1994 (5) TMI 128 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit and imposition of penalty by the Collector of Central Excise.
2. Interpretation of Rule 57G regarding the timing of taking credit for duty paid on inputs.
3. Requirement of prior permission under Rule 57H for taking credit of duty paid on inputs.
4. Question of limitation for invoking the extended period under Rule 57-I.

Analysis:

1. The appeal was against the disallowance of Modvat credit and penalty imposed by the Collector of Central Excise. The appellant, M/s. Webel Tools (India) Limited, had taken credit of Rs. 18,250.18 under Rule 57-I(1) of the Central Excise Rules, which was disallowed by the Collector. The Collector held that the appellant had suppressed the fact of not obtaining permission under Rule 57H, leading to the invocation of the longer period for the notice.

2. The appellant argued that they had a strong case on merits and that the longer time limit was wrongly invoked. They contended that Rule 57G allows taking credit after filing the declaration, not necessarily after obtaining dated acknowledgement. The appellant also raised the point that even if Rule 57G(2) was interpreted differently, their earlier declaration in August 1987 should be considered. They relied on a tribunal decision to support their interpretation.

3. Regarding the requirement of prior permission under Rule 57H, the appellant argued that such permission was not explicitly mandated in the rule. However, the Departmental Representative contended that the Assistant Collector's permission was necessary for taking credit of duty paid on inputs received before obtaining the dated acknowledgement of the declaration.

4. On the question of limitation, the appellant argued that there was no suppression or misstatement of facts. They had disclosed the credit availed in their statutory records and returns. The Tribunal found that the appellant had not suppressed material facts, as the fact of not obtaining permission under Rule 57H was known to the department. The Tribunal allowed the appeal on the time bar issue, ruling that the notice was issued very late, and the longer time limit was not applicable in this case.

5. The Tribunal rejected the appellant's argument that credit could be taken for inputs received earlier than the dated acknowledgement under Rule 57G. It emphasized the importance of Rule 57H for allowing credit for inputs received prior to the declaration. The Tribunal also clarified that an application under Rule 57H was necessary to enable the Assistant Collector to be satisfied about the stock position and receipt of inputs.

6. In conclusion, the Tribunal allowed the appeal on the time bar issue, finding that the notice was issued late and the longer time limit was not applicable. The other contentions, including the interpretation of Rule 57G and the requirement of prior permission under Rule 57H, were not accepted by the Tribunal.