1997 (10) TMI 247 - AT - Central Excise

Summary

Issues:
Appeal against Commissioner (Appeals) orders, denial of Modvat credit due to technical lapses, validity of classification list as a substitute for declaration under Rule 57G.

Analysis:
The appeal was filed by the department challenging the orders passed by the Commissioner (Appeals) regarding the denial of Modvat credit due to technical lapses. The Commissioner (Appeals) held that the failure to declare steel castings under the specific Chapter Heading 7206.90 was a procedural lapse and not a sufficient reason to deny substantial benefits under the Modvat credit scheme. The Commissioner emphasized that the purpose of declaration is to enable the department to verify eligibility for the credit, and since there was an approved classification list, the lapse did not cause serious prejudice to the department. The Commissioner relied on previous CEGAT decisions and allowed the appeal in favor of the appellant.

The department, represented by the JDR, argued that without a proper declaration specifying the items, Modvat credit cannot be granted. It was highlighted that filing a classification list is a separate legal requirement and cannot replace the necessity of filing a declaration under Rule 57G. On the other hand, the respondent's Advocate contended that technical lapses should not lead to the denial of substantial benefits of Modvat credit. Citing previous decisions, it was argued that when the department is aware of the assessee's activities, minor lapses should not be a reason to deny credit.

The Assistant Commissioner had initially denied the benefit to the appellant based on the lack of proper declaration. The Assistant Commissioner pointed out discrepancies in the declarations filed by the appellant, where the final product specified did not match the actual product cleared. It was observed that the party had availed credit on inputs for undeclared final products, rendering them ineligible for the credit. The Assistant Commissioner deemed the party's arguments unacceptable, leading to the denial of the benefit.

The Tribunal, upon considering the submissions from both sides, found that the classification list filed by the appellant was not a substitute for the required declaration. Referring to a previous decision, the Tribunal emphasized that the filing of a classification list does not fulfill the legal obligation of filing a declaration. The Tribunal differentiated the facts of the case from the decisions cited by the respondent's Advocate, stating that the absence of a declaration for the specific product in question was not justified by the appellant's reasoning of work pressure.

In conclusion, the Tribunal held that the impugned order denying the benefit to the appellant was not sustainable. The appeal was allowed, providing consequential relief to the appellant.