1996 (2) TMI 259 - AT - Central Excise

Summary

Issues:
1. Availment of modvat credit on inputs not declared under Rule 57G.
2. Interpretation of declaration requirements for modvat credit eligibility.
3. Specificity of input declaration under Rule 57G.
4. Eligibility of modvat credit for certain inputs.
5. Imposition of penalty under Rule 173Q for non-compliance with Rule 57G.

Analysis:
1. The appeal challenged the Collector of Central Excise (Appeals) order regarding the irregular availment of modvat credit on inputs not declared under Rule 57G. The Assistant Collector demanded duty and imposed a penalty on the appellants for this violation, which was upheld in appeal.

2. The appellant's counsel argued that the declaration provided details of inputs, even if some items like switches were not specifically described. Citing a Tribunal decision, the counsel contended that as long as the description and sub-heading for inputs and final products were available in the declaration, modvat credit should be allowed if inputs were used for manufacturing final products.

3. The Departmental Representative pointed out discrepancies in the declaration, such as Body Time Delay relay base declared as a cast zine article and brass screws declared under the wrong chapter. Certain inputs like aluminium anodised name plates, moulding powder, and electrical contacts were not declared at all.

4. The Tribunal clarified that only inputs declared under Rule 57G were eligible for modvat credit. Inputs like aluminium anodised name plates, moulding powder, electrical contacts, and brass screws not declared were ineligible. However, the general description of switches covered snap switches, and the declaration of relay base as a cast article of zinc was considered acceptable due to matching tariff headings.

5. The Tribunal allowed modvat credit for inputs in dispute, except for those specifically mentioned, and set aside the penalty considering the nature of the offense. The appeal was disposed of accordingly, with a detailed analysis of each input's eligibility for modvat credit based on the declaration requirements under Rule 57G.