1996 (7) TMI 230 - AT - Central Excise

Summary

Issues:
Claim for Modvat credit on certain inputs; Allegation of incorrect declaration of inputs; Imposition of penalty on the assessee.

Analysis:
The assessee, a manufacturer of steel ingots, filed a claim for Modvat credit on various inputs declared by them. During scrutiny, it was observed that credit had been taken on inputs described in the covering challan as DEF, which was not specifically declared by the assessee. Consequently, a show cause notice was issued seeking reversal of the credit and imposition of a penalty. The Deputy Collector confirmed the demand and imposed a penalty of Rs. 20,000 on the assessee, which was upheld in the appeal proceedings. The appeals were filed against this order dated 25-9-1995.

Shri R. Santhanam, advocate for the appellants, argued that the cited inputs were duly declared in the impugned declaration, citing Tribunal orders and judgments to support his claim. He contended that any minor variation in the declaration should not lead to the denial of substantial benefits. He further argued that the alteration in the description of the invoice might have occurred at the stock yard of the manufacturer, not by the assessee, and should not warrant a penalty. He emphasized that the alleged alterations were beyond the scope of the show cause notice, rendering the order unsustainable.

On the other hand, Shri Y.R. Kilaniya, representing the department, stressed that the goods in question were not included in the declaration filed by the assessee and that the invoices were altered, justifying the imposition of the penalty.

After considering the arguments and perusing the records, it was noted that the impugned goods were indeed covered under the declaration filed by the assessee, which encompassed various goods falling under different tariff headings. The declaration included waste and scrap items, such as defective mill roll products, indicating that the impugned goods were eligible inputs. It was clarified that the word "def" was likely added after the issue of the challan and did not affect the eligibility of the goods as scrap. The order denying Modvat credit and imposing a penalty was deemed unsustainable, leading to the allowance of the appeal, setting aside the lower order, and ordering consequential relief.