1996 (4) TMI 292 - AT - Central Excise

Summary

Issues:
1. Interpretation of Modvat credit declaration under Rule 57G for inputs used in manufacturing photo-copier machines falling under sub-heading 9009.00 of the Central Excise Tariff Act.
2. Review of Assistant Commissioner's decision dropping the demand by the Commissioner of Central Excise.
3. Determination of the scope of Modvat credit eligibility based on the specificity of the declaration of inputs under Rule 57G.
4. Applicability of Modvat credit to inputs falling under various sub-headings other than the one declared.

Analysis:

1. The appellants manufactured photo-copier machines and filed a declaration under Rule 57G specifying inputs for the final product as "parts, accessories and components" falling under heading 9033.00 of the Central Excise Tariff Act. The department initiated proceedings against the appellants for availing Modvat credit on inputs from other chapters and sub-headings not declared under Rule 57G.

2. The Assistant Commissioner dropped the demand, but the Commissioner of Central Excise sought a review under Section 35E(2) of the Central Excises and Salt Act, 1944. The main issue in the review was whether inputs falling under various sub-headings beyond the declared heading 9033.00 were covered by the Modvat declaration.

3. The Commissioner (Appeals) held that the appellants' broad declaration under heading 9033.00 did not cover inputs from other sub-headings, emphasizing the need for specificity in the declaration to claim Modvat credit. The Commissioner concluded that Modvat credit should be denied for inputs not falling under the declared heading, as per Rule 57G requirements.

4. The appellants argued that the Commissioner (Appeals) erred in disallowing Modvat credit even for inputs declared under heading 9033.00. The Tribunal acknowledged the broad description in the declaration but emphasized the necessity of specific descriptions for Modvat eligibility. The Tribunal directed the Assistant Commissioner to extend Modvat credit for inputs falling under Chapter 90, modifying the Commissioner (Appeals) order.

5. Additionally, the Tribunal left the determination of the limitation period for duty recovery to the Assistant Commissioner, providing the appellants with a reasonable opportunity to address the issue. The appeals were disposed of with directions to extend Modvat credit for eligible inputs under Chapter 90 and further consideration of the limitation aspect.

This judgment clarifies the importance of specific declarations for Modvat credit eligibility and highlights the need for alignment between declared inputs and actual utilization in manufacturing processes to claim such benefits.