1999 (5) TMI 137 - AT - Central Excise

Summary

Issues:
Whether the Respondents were eligible to avail Modvat credit under Rule 57H for inputs in stock on 31-3-1995 without permission.

Analysis:
The Appeal raised the issue of whether M/s. Z.A. Enterprises could avail Modvat credit under Rule 57H for inputs in stock on 31-3-1995 without the Assistant Commissioner's permission. The Respondents had requested permission to avail Modvat credit on sacks from 1-4-1995, which was granted by the Assistant Commissioner under a letter condoning the delay in filing the declaration under Rule 57G. The dispute arose when the Assistant Commissioner disallowed Modvat credit for sacks in stock on 31-3-1995, as the Respondents had not sought permission under Rule 57H by 15-4-1995. The Commissioner (Appeals) later set aside the Assistant Commissioner's decision, leading to an Appeal by the Revenue.

The Revenue argued that the delay condoned by the Assistant Commissioner only applied to the declaration under Rule 57G, not Rule 57H, and thus, the Respondents were not entitled to credit for sacks in stock on 31-3-1995. The Respondents contended that once delay was condoned, it covered all delays in filing declarations, and no separate permission was required under Rule 57H(1B) to avail Modvat credit. They also highlighted that no time limit for filing the declaration was specified under Rule 57H(1B), asserting their eligibility for the credit.

The Tribunal examined the submissions and noted that while the Respondents had sought permission for credit on sacks used from 1-4-1995 to 8-8-1995, they did not mention the stock balance on the date Modvat credit became applicable for HDPE sacks. The Tribunal emphasized that filing a declaration under Rule 57H(1B) was mandatory, as per the rule's provisions. Referring to the Shivani Surgicals Pvt. Ltd. case, the Tribunal held that the failure to file the declaration under Rule 57H could not be condoned lightly, as it was crucial for verifying inputs in stock or used in final products.

Ultimately, the Tribunal allowed the Revenue's Appeal, emphasizing that the Respondents' failure to comply with the declaration requirement under Rule 57H(1B) led to the denial of Modvat credit, in line with the precedent set by the Shivani Surgicals Pvt. Ltd. case. The judgment highlighted the importance of following statutory procedures and the significance of filing necessary declarations for availing benefits under the Central Excise Rules.