1997 (1) TMI 255 - AT - Central Excise

Summary

Issues:
Appeal against disallowance of Modvat credit under Rule 57-I of the Central Excise Rules based on non-declaration of final product under Rule 57G.

Detailed Analysis:

1. The appellants, engaged in manufacturing paints, varnishes, and chemicals, availed Modvat credit on inputs used in their final products. The dispute arose when the Commissioner disallowed Modvat credit of Rs. 2,04,324.14, citing non-declaration of the final product under Rule 57G.

2. The Show Cause Notice alleged that the appellants failed to reverse the Modvat credit wrongly availed due to utilizing duty paid on inputs for a final product, Alkyd Resin, not declared under Rule 57G. The appellants contended that the process was disclosed in their returns and declarations, relying on tribunal decisions in similar cases.

3. The Adjudicating Authority held that the appellants' actions did not rectify the omission adequately, leading to a longer limitation period due to non-declaration of the final product under Rule 57G, which is mandatory.

4. The appellants argued that they did declare inputs used in the manufacture of paints, including resins, via intermediate resins, but failed to specifically mention Alkyd Resin in the Rule 57G declaration, which was deemed crucial by the Tribunal.

5. The Tribunal emphasized the mandatory nature of Rule 57G, requiring specific declaration of inputs for each final product. The failure to comply with this rule was considered more than a procedural irregularity, leading to the denial of Modvat credit.

6. The Tribunal distinguished previous cases cited by the appellants, emphasizing the importance of accurate and specific declarations under Rule 57G to avail of Modvat credit, highlighting the distinction between pre-manufacturing requirements and post-manufacturing statements.

7. Ultimately, the Tribunal held that the appellants' failure to comply with Rule 57G amounted to suppression, justifying the longer limitation period taken by the department. The appeal was dismissed based on the non-compliance with the provisions of Rule 57G, rendering the appellants ineligible for Modvat credit.

8. The Tribunal concluded that the appellants' omission to declare Alkyd Resin specifically under Rule 57G was not a mere procedural irregularity but a violation of the rule's mandatory requirements, leading to the denial of Modvat credit and dismissal of the appeal.