1998 (10) TMI 247 - AT - Central Excise

Summary

Issues: Modvat credit on various inputs, maintenance of RG 23A register, limitation period for credit, penalty imposition.

The judgment dealt with an appeal regarding Modvat credit on inputs like grinding wheels, tools, components, and steel items. The appellant took credit from March to December 1987, but a notice in 1992 proposed recovery of credit due to incomplete description in the declaration and lack of maintenance of the RG 23A register for steel items, along with a penalty. The Collector confirmed the denial of credit amounting to Rs. 1,75,068.95 and imposed a penalty of Rs. 50,000. The appellant argued that the inputs were covered by the broad description in the declaration and contended that the demand was time-barred.

Regarding the limitation period, it was acknowledged that a part of the credit period was beyond five years, making it indisputably barred by limitation. However, for the remaining credit, it was argued that the RG 23A Part I account was submitted monthly as required, with no objections raised by assessing officers. Despite the absence of original duty paying documents, it was expected that records would have been demonstrated for at least some months. The demand for inputs other than steel was held as barred by limitation due to lack of evidence of misdescription.

In the case of steel items, since the appellant did not maintain the RG 23A register, the Department was not conclusively made aware of the credit taken on undeclared inputs. The appellant suggested demonstrating to the Commissioner that the Department was aware of the steel inputs being received and credited, which was accepted, and the Commissioner was directed to pass orders accordingly. The penalty for unclear declaration of goods was set aside due to the transitional nature of the Modvat procedure during the relevant period, indicating no deliberate attempt to evade declaration.

Ultimately, the appeal was allowed in part, with the demand for inputs other than steel being held as time-barred, and further directions given for the Commissioner to assess the situation regarding steel inputs and credit.