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1996 (4) TMI 306 - AT - Central Excise
Issues involved: Reversal of Modvat credit due to failure to file a fresh declaration under Rule 57G post-amalgamation and the invocation of the extended period for issuing show cause notices.
Reversal of Modvat Credit: The Commissioner of Central Excise ordered the reversal of Modvat credit in two cases due to the failure of the amalgamated unit to file a fresh declaration under Rule 57G after amalgamation with another entity. The Department alleged that the Modvat credit was availed without disclosing the change in the unit's status, leading to the reversal of credits amounting to Rs. 16,54,968/- and Rs. 1,00,722/- in the respective cases. However, it was established that there was no change in the inputs or final products post-amalgamation, and the substantive part of the declaration remained intact. The failure to file a fresh declaration was deemed a technical requirement rather than a substantive violation of Rule 57G, as the inputs and final products remained consistent, and the change was only in control due to amalgamation. Invocation of Extended Period: The show cause notices issued beyond six months in both cases, covering the period from April 1990 to November 1990, were contested for invoking the extended period. It was argued that the Department was aware of the amalgamation and the filing of the declaration by the original entity. The failure to insist on a fresh declaration post-amalgamation was not indicative of deliberate suppression or evasion of duty by the amalgamated unit. The absence of a fresh declaration did not provide any undue benefit to the unit, as they would have been entitled to the Modvat benefit even with proper disclosure. Therefore, the alleged technical omission did not amount to deliberate suppression, fraud, or misdeclaration, justifying the invocation of the extended period for issuing show cause notices. Additionally, the demand was deemed time-barred, further supporting the decision to allow both appeals and dispose of the stay petitions accordingly.
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