1997 (3) TMI 322 - AT - Central Excise

Summary

Issues:
1. Time limitation for denying Modvat credit
2. Discrepancies in declaration of inputs and actual goods brought

Analysis:

Issue 1: Time limitation for denying Modvat credit

The case involved a dispute regarding the time limitation for denying Modvat credit to the appellants. The Revenue issued a show cause notice to the appellants, seeking to disallow Modvat credit amounting to Rs. 72,793.07 for inputs brought during a specific period. The appellants contended that the show cause notice was time-barred as it was issued after six months of taking the credit. The Revenue argued that certain items were not declared in the required declaration under Rule 57G, making the credit irregular. The Tribunal, after considering both sides, held that the normal time limit of six months for denying Modvat credit should be counted from the date of taking the credit. Therefore, the show cause notice disallowing the credit for a certain period was deemed time-barred.

Issue 2: Discrepancies in declaration of inputs and actual goods brought

The appellants brought inputs for their manufacturing process, and discrepancies arose between the description declared under Rule 57G and the actual goods brought. The appellants argued that the discrepancies did not vitiate their declaration, and hence, Modvat credit should not be disallowed. The lower authorities, however, held that discrepancies in headings between the declaration and actual goods warranted disallowance of the credit. Upon careful examination, the Tribunal found that the goods brought by the appellants aligned with the declared descriptions. For each group of inputs, the Tribunal observed that the goods brought matched the declared inputs, even if there were minor discrepancies in headings. The Tribunal emphasized that the nature of the goods brought, as indicated by the term "Proof Machined Forging Article," was consistent with the declaration under Rule 57G. Additionally, it noted that the appellants had further machined the inputs in their factory, supporting their claim. Consequently, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, determining that the show cause notice was time-barred for certain Modvat credit disallowances and that discrepancies in headings did not warrant the denial of credit, as the goods brought aligned with the declared inputs.