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1998 (12) TMI 249 - AT - Central Excise
Issues:
1. Modvat credit availed on inputs not included in the declaration under Rule 57G of the Central Excise Rules. 2. Barred by limitation under Rule 57-I of the Central Excise Rules for the demand. 3. Necessity of making a precise declaration of inputs for Modvat purposes. Issue 1: Modvat Credit on Undeclared Inputs The appellants were manufacturing excisable goods and availing Modvat credit on inputs. A show cause notice was issued for availing Modvat on inputs not included in the declaration under Rule 57G. The Collector confirmed the demand, ordered to reverse the amount in the Modvat credit account, and imposed penalties on the appellants. The appellants contended that the demand was barred by limitation under Rule 57-I, citing previous Tribunal decisions and arguing that they had now provided detailed descriptions of inputs used in their final product. Issue 2: Limitation Under Rule 57-I The appellants argued that the demand was time-barred under Rule 57-I. They presented evidence that previous returns had been finalized, adjustments made, and audits conducted without objections. They also highlighted Tribunal decisions stating that demands cannot be made based solely on audit objections. The Tribunal found merit in the appellants' arguments, noting that the demand may be hit by limitation, especially considering the detailed descriptions provided by the appellants and the absence of doubt regarding the nature and use of inputs in the final product. Issue 3: Necessity of Precise Declaration for Modvat The Department argued that a precise declaration of inputs for Modvat purposes was mandatory and failure to do so amounted to suppression. They cited a trade notice and a Tribunal decision to support their argument. However, the Tribunal observed that the focus was on whether the demand was time-barred under Rule 57-I, rather than the merits of the case regarding the mandatory nature of the declaration under Rule 57G. The Tribunal ultimately set aside the impugned order, allowing the appeals and granting the appellants consequential relief in accordance with the law.
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