1997 (4) TMI 159 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 57H(1)(A) regarding the necessity of an application for verifying stocks before seeking credit of duty paid inputs lying in stock.

Analysis:
The case involved M/s. Mahalaxmi Steel Rolling Mills Pvt. Ltd., a manufacturer of iron and steel products, who took Modvat credit without making an application under Rule 57H for permission to seek credit of duty paid inputs. The department alleged that the credit was wrongly taken, leading to a show cause notice. The ld. Collector (Appeals) allowed the appeal of the respondents, prompting the department to file an appeal before the Tribunal. The main contention was whether an application under Rule 57H(1)(A) was necessary for the Asstt. Collector to verify stocks before allowing credit, as the respondents had taken credit before filing the declaration under Rule 57G. The Tribunal's order was silent on how the Asstt. Commr. could reach a decision under Rule 57H without a formal application for credit by the respondents.

The ld. DR argued that without a special request under Rule 57H, the verification of stocks and subsequent allowance of Modvat credit did not arise. He requested a reference to the High Court due to the significant legal issue involved. On the other hand, the ld. Advocate for the respondents cited Tribunal decisions where it was held that no prior permission was necessary for availing Modvat credit on inputs lying in stock.

After considering various Tribunal decisions, the Tribunal found conflicting views on the necessity of a separate application under Rule 57H(1)(A) for availing Modvat credit. The Tribunal concluded that a point of law was involved, specifically whether a separate declaration under Rule 57H(1)(A) was required or if declaring inputs in the Rule 57G declaration sufficed. Therefore, the Tribunal deemed it appropriate to refer the case to the jurisdictional High Court for clarification on this legal issue.

In conclusion, the Tribunal directed the Registry to prepare a statement of facts for reference to the High Court, disposing of the reference application accordingly.