1997 (6) TMI 156 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit by Assistant Collector.
2. Interpretation of Rule 57H regarding transitional provisions.
3. Applicability of prior permission for availing transitional provisions.

Analysis:

The case involved the disallowance of Modvat credit by the Assistant Collector on the grounds that the goods were received before filing a declaration under Rule 57G, and that the transitional provision under Rule 57H did not cover the situation. The Collector (Appeals) upheld the lower order, leading to the current appeal.

The Excise Manager of the appellant argued that the case fell under sub-clause (b) of Clause 1A of Rule 57H, citing relevant judgments and guidelines. The department's representative, arguing for the disallowance, stated that if the Assistant Collector misinterpreted Rule 57H, he had no objection to remanding the case for reconsideration.

Upon careful consideration of the cited judgments, records, and arguments, it was observed that Rule 57G mandates filing a declaration before taking Modvat credit, with certain exceptions provided under Rule 57H as transitional provisions. The rule outlines two distinct situations where credit can be availed, and the Assistant Collector erred in conflating these situations. It was clarified that if inputs were used in manufacturing final products cleared after filing the declaration, credit was permissible. The requirement of prior permission for availing Rule 57H provisions was deemed baseless.

Consequently, the appellant succeeded in the appeal. The case was remanded to the Assistant Collector for reassessment to determine if the goods were used as per Rule 57H, with instructions to grant appropriate credit if satisfied with the compliance.