1997 (4) TMI 156 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57G of the Central Excise Rules, 1944 regarding Modvat credit.
2. Whether filing a declaration under Rule 57G is a procedural requirement or a mandatory condition.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the admissibility of Modvat credit under Rule 57G of the Central Excise Rules, 1944. The Respondents, engaged in the manufacture of steel ingots, had not declared HBI Sponge Iron as an input under Chapter 7203.00 of the Central Excise Tariff Act, 1985, despite availing Modvat credit on it. The Additional Collector confirmed the demand, but did not impose a penalty. The appeal by the Respondents was allowed by the ld. Collector (Appeals), prompting the Commissioner to appeal against this decision.

The main contention raised by the ld. JDR for the appellant Commissioner was that Rule 57G(1) mandates obtaining a dated acknowledgment along with filing a declaration to avail Modvat credit. The appellant argued that mere dispatch of the declaration, even by Registered Post, does not entitle a manufacturer to take credit without obtaining the necessary acknowledgment. It was emphasized that the requirement of declaration under Rule 57G is not procedural but mandatory. The appellant asserted that the Respondents failed to comply with this mandatory requirement, urging the Tribunal to set aside the lower authority's decision and allow the appeal.

On the other hand, the Respondents' advocate argued that the filing of a declaration under Rule 57G is a procedural requirement, citing previous Tribunal judgments that substantive benefits should not be denied due to procedural irregularities. The advocate contended that since the declaration was filed under an UPC and brought to the attention of the authorities, the Respondents should be granted the substantive benefit of taking Modvat credit on the input.

After considering the arguments from both sides, the Tribunal focused on determining whether Rule 57G is procedural or mandatory. Referring to previous Tribunal decisions, the Tribunal highlighted that a manufacturer must file a declaration and obtain an acknowledgment to claim Modvat credit. In this case, the filing of the declaration was in doubt as no acknowledgment was obtained. The Tribunal noted that the admission by an authorized signatory that the input was not declared in the declaration further weakened the Respondents' position. Ultimately, the Tribunal held that since no acknowledgment was obtained, the Modvat credit was not admissible to the Respondents, leading to the setting aside of the impugned order and allowing the appeal.