1994 (12) TMI 247 - AT - Central Excise

Summary

Issues:
- Denial of MODVAT credit by the Department
- Classification of goods under Chapter 54 and subsequent re-classification under Chapter 59
- Eligibility of the appellants to claim MODVAT credit
- Interpretation of Rule 57A and Rule 57G
- Consideration of limitation period for claiming MODVAT credit

Analysis:
The appeal challenged the denial of MODVAT credit by the Department to the appellants, who were manufacturers of tyres and rubber products. The issue arose when the Department re-classified the inputs, Dipped Chafer Fabric, from Chapter 54 to Chapter 59, making it eligible for MODVAT credit under the Notification issued under Rule 57A. The appellants sought MODVAT credit after the re-classification, supported by duty payment evidence and a certificate from the suppliers. The Department rejected the claim citing lack of proper declaration under Rule 57E. The appellants contended that they were consumers, not manufacturers of the input, and were entitled to credit post re-classification. The Department argued against retrospective operation of subsequent declarations, emphasizing adherence to Rule 57A and Rule 57G.

The Tribunal analyzed the eligibility of the appellants for MODVAT credit during the period in question, considering the change in goods classification and the receipt of the certificate. It noted that the appellants could claim credit only post re-classification or upon knowledge of the change. The Tribunal found merit in the appellants' argument that the Department's actions should not prejudice their entitlement to credit. It remanded the matter for fresh consideration, emphasizing the need to review the issue in light of the evidence presented. The Tribunal acknowledged the limitation period under Rule 57E for claiming or enhancing credit, directing the original authority to reassess the appellants' eligibility in compliance with the law after granting a fair hearing. Consequently, the impugned order was set aside, and the appeal was allowed through remand for further evaluation.