1996 (1) TMI 225 - AT - Central Excise

Summary

Issues:
1. Denial of Modvat credit based on incorrect description in the declaration.

Analysis:
The appeal was filed against the order of the Collector of C. E. (Appeals), Madras, confirming the direction to reverse Modvat credit due to an incorrect declaration. The appellant used ribbed bars from M/s. Steel Authority of India Ltd. as inputs for manufacturing CTD bars and ribbed bars. The appellant declared the inputs as re-rollable scrap instead of ribbed bars, which was argued to be a technical error. The inputs and final products were covered by the Modvat scheme. The Trade Notice clarified that Modvat credit should not be denied if the correct classification of inputs is declared and duty is paid accordingly. The Tribunal noted that the description discrepancy was technical and did not impact revenue, thus allowing the appeal.

The main question was whether the denial of Modvat credit due to an incorrect description in the declaration was lawful. The Tribunal found that the inputs and final products were eligible for Modvat credit, and the correct tariff description was provided. The ribbed bars were considered defective bars, akin to re-rollable scrap. The Trade Notice emphasized correct classification and duty payment, supporting the appellant's position. The Collector (Appeals) deemed the description too broad, but the Tribunal viewed it as a technical error without revenue implications. Consequently, the impugned order was set aside, and the appeal was allowed.

In a separate opinion, Member (T) Gulati concurred with the decision, noting that the ribbed bars were defective and could be treated as re-rollable scrap. Considering the correct tariff heading provided by the appellant, the order denying Modvat credit was deemed unsustainable. Therefore, the lower authority's order was set aside, and the appeal was allowed.