1996 (3) TMI 331 - AT - Central Excise

Summary

Issues:
1. Eligibility for Modvat credit in respect of copper wires under Sub-heading 7408.19.
2. Validity of deletion of inputs covered by "others" under Sub-heading 7408.19 from the declaration for Modvat credit.

Analysis:

Issue 1:
The case involves the eligibility for Modvat credit concerning copper wires under Sub-heading 7408.19. The appellants had initially filed a declaration stating they manufacture cables falling under Chapter 85 under sub-heading 8544.00 and sought Modvat Credit on inputs, including copper wires. The Assistant Commissioner's office received the declaration on 19-7-1988. Subsequently, the appellants submitted amended declarations of inputs on 23-9-1988. The issue arose when the Assistant Commissioner concluded that the deletion of the term "others" from the declaration rendered copper wire falling under Sub-heading 7408.19 ineligible for Modvat credit. This led to proceedings against the appellants, culminating in a demand for Rs. 1,50,523/- under Rule 57-I of the Central Excises and Salt Act, 1944.

Issue 2:
Regarding the validity of the deletion of inputs covered by "others" under Sub-heading 7408.19 from the declaration, the appellants argued that it was an inadvertent act by their representative and that there was no communication to the Department to delete the inputs. The Department had granted permission to send out Modvat inputs for job work until 30-6-1991. The appellants cited case law to support their position that even with a broad description of inputs, Modvat credit cannot be denied. On the other hand, the Department contended that since the appellants themselves deleted the input from the declaration, the recovery of duty availed as Modvat credit was justified.

The Tribunal, after considering the submissions, noted that the deletion of the inputs from the declaration was unintentional and technical in nature. It was observed that there was no evidence of the appellants seeking the deletion of the input previously included in their declaration. Additionally, the Department took no steps to amend or withdraw the permission granted for the removal of inputs outside the factory. The Tribunal found the deletion to be due to inadvertence and set aside the impugned order, allowing the appeal in favor of the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the deletion of inputs covered by "others" from the declaration was unintentional and technical, thereby allowing the appeal and setting aside the demand for recovery of Modvat credit.