1997 (1) TMI 283 - AT - Central Excise

Summary

Issues: Sufficiency of declaration under Modvat Scheme for extending Modvat credit.

In this case, the issue revolved around the sufficiency of the declaration under the Modvat Scheme for extending Modvat credit. The applicants had filed a Modvat declaration under Rule 57G, declaring their inputs as Spin Finish Oil classifiable under Chapter Heading 34.02 or 34.03. The dispute arose when the credit availed on Sapcostat 2152P, falling under sub-heading 34.03, was disallowed as the declaration mentioned a general description of goods as Spin Finish Oil by various trade names. The Assistant Collector disallowed a portion of the credit, which was upheld by the Collector (Appeals) and subsequently by the Tribunal.

The Tribunal rejected the appeal, stating that the specific product, Sapcostat Finish, was not mentioned in the declaration, and the Tariff sub-heading for Spin Finish was not specified in the declaration filed by the applicants. The Counsel for the appellants argued that since Sapcostat was a brand name for Spin Finish Oil and Chapter 34 was declared in the 57G declaration, it should have been considered sufficient. The dispute centered on whether the declaration adequately covered the specific product for which credit was sought.

The learned DR contended that the sufficiency of the declaration was a question of fact, not a question of law necessitating reference to the High Court. However, the Tribunal held that the sufficiency of the declaration under the Modvat Scheme indeed raised a question of law. Considering that the Department acknowledged Sapcostat Finish as a type of Spin Finish Oil, and the applicants had declared Spin Finish Oils by various trade names, along with declaring Chapter 34 in their 57G declaration, the Tribunal concluded that a question of law existed for reference to the High Court.

Ultimately, the Tribunal decided to refer the question to the High Court of Rajasthan, seeking clarification on whether the declaration filed under Rule 57G should be accepted for extending Modvat credit when the description of goods was of a general nature, such as Spin Finish Oil by various trade names, while the goods received bore a specific trade name, Sapcostat 2152P, both falling under Chapter 34 of the CETA, 1985. The judgment highlighted the importance of clarity and specificity in declarations under the Modvat Scheme to ensure the proper availing of credits based on the nature and classification of goods.