1998 (7) TMI 337 - Commissioner - Central Excise

Summary

Issues:
1. Availment of modvat credit based on invoices issued by a dealer.
2. Denial of modvat credit and imposition of penalty by the lower authority.
3. Interpretation of Rule 57G(2) regarding availment of credit on exempted dyed yarn.
4. Condonation of delay for non-filing of declaration under Rule 57G(5).

Analysis:
1. The case involved an appeal by a manufacturing company against the Order-in-Original passed by the Assistant Commissioner of Central Excise, alleging improper availment of modvat credit based on invoices from a dealer. The appellants were manufacturing narrow woven Elastic tapes and availing credit under Rule 57A of the Central Excise Rules, 1944. The dispute arose when it was discovered that the dealer had received undyed nylon crimped yarn, dyed it, and then supplied the dyed yarn to the appellants, who claimed credit without filing a declaration in time. The lower authority disallowed the credit and imposed a penalty.

2. In response, the appellants argued that they received the goods directly from the dealer with proper Central Excise documents, as the dealer was registered with the Central Excise Department. They contended that denial of modvat credit was unjustified since they received the inputs with proper duty paying documents. The Commissioner carefully examined the facts and submissions, noting that the dealer had issued invoices with all relevant duty payment details. The lower authority's observation that the dyed yarn was exempt and credit could not be claimed on it was deemed incorrect, as the duty paid character of the goods was established. The Commissioner found that since duty was paid on the undyed yarn, credit should be available for the dyed yarn, even if exempt.

3. Regarding the delay in filing the declaration, the Commissioner opined that the lower authority should have condoned the delay under Rule 57G(5). The appellant had filed the condonation application, and the inputs were received in the factory after the declaration was submitted. Therefore, the delay should have been excused. Ultimately, the Commissioner allowed the appeal and overturned the lower authority's decision, setting aside the disallowance of credit and the penalty imposed.

This detailed analysis of the judgment highlights the issues of modvat credit availment, interpretation of relevant rules, and the application of principles of condonation of delay in excise matters.