1997 (9) TMI 244 - AT - Central Excise

Summary

Issues:
- Appeal against confirmation of demand and penalty for taking credit on undeclared inputs and failure to file Modvat declaration for changed sub-headings of acrylic fibre/acrylic waste.

Analysis:
1. The appeal arose from an Order-in-Appeal confirming a demand of Rs. 3,85,118/- and a penalty of Rs. 25,000/- imposed by the Assistant Commissioner based on the allegation that the appellants had taken credit on undeclared inputs and failed to file Modvat declaration for changed sub-headings. The appellants contended that they had filed necessary declarations and invoices, which were not substantiated by the department. Both authorities rejected their pleas without proper verification, leading to the confirmation of the demand and penalty.

2. The Tribunal examined the impugned orders, records, and arguments from both sides. The appellants had filed declarations under various rules, including Rule 57G, and had also filed a fresh declaration under Rule 57G(5) seeking condonation of delay and permission to avail Modvat. The Tribunal noted that the authorities failed to properly examine the issue in light of the declarations, rules, and legal precedents, including the case of Collector of Central Excise v. Triton Valves Ltd., where it was held that credit cannot be disallowed for procedural irregularities if duty paid inputs were used in the final product.

3. Referring to various legal judgments, such as Jain Kaliawala Engg. Works Pvt. Ltd. v. Collector of Central Excise and Kelvinator of India Ltd. v. Collector of Central Excise, the Tribunal emphasized that minor variations in sub-headings or wrong mention of sub-headings should not be grounds to deny Modvat credit. It was held that the duty-paying nature of the invoices and the description of the goods were not disputed, and the proceedings initiated against the appellants were deemed unsustainable based on the legal precedents cited.

4. Consequently, the Tribunal set aside the impugned orders and remanded the matter to the original authorities for verification of the duty-paying nature of the invoices and the description of goods. The appellants were directed to be granted Modvat credit in accordance with the law and the legal rulings cited in the judgment. The appeal was allowed by remand to the original authorities for further proceedings in line with the legal principles discussed in the judgment.