1996 (3) TMI 185 - AT - Central Excise

Summary

Issues:
Denial of Modvat credit due to incorrect classification of goods under Chapter sub-heading in the declaration filed under Rule 57G.

Analysis:
The appeal was filed against the denial of Modvat credit based on the incorrect classification of goods under the Chapter sub-heading in the declaration filed under Rule 57G. The appellants were engaged in the manufacture of multilayer co-extruder, plastic films, and procured LLDPE granules for this purpose. The Department alleged that the LLDPE granules were classified under Chapter sub-heading 3901.90, whereas the declaration by the appellants showed them classified under 3901.10. Consequently, the benefit of Modvat credit on this item was denied by the lower authorities.

The learned Advocate for the appellants argued that the confusion in classification arose due to one supplier changing the classification to 3901.90 while the other continued with 3901.10. Citing previous Tribunal decisions, the Advocate contended that the disparity in Tariff classification between the declaration and gate pass should not affect the substantive benefit as long as both Tariff headings are eligible for Modvat credit as per the notification under Rule 57A. It was emphasized that the correct description of goods was provided in the declaration, complying with Rule 57G.

On the other hand, the Departmental Representative reiterated the findings of the lower authorities and supported the denial of Modvat credit. After hearing both sides, the Judge analyzed the relevant Rules, particularly Rule 57A and Rule 57G. It was noted that the inputs and final product were specified items as required by Rule 57A, and the correct Chapter heading was given in the declaration. The dispute centered around the Chapter sub-heading, not the Chapter heading itself.

The Judge concluded that the appellants had furnished the correct and complete description of the goods as required by Rule 57G. Considering the compliance with legal requirements and previous Tribunal decisions, it was held that the LLDPE input was correctly described in the declaration, and the correct Chapter Heading was provided. Consequently, the appellants were deemed entitled to Modvat credit on this input. The appeal was allowed, the impugned order was set aside, and any consequential relief was to be granted to the appellants in accordance with the law.