1998 (5) TMI 242 - AT - Central Excise

Summary

Issues:
Modvat credit denial due to lack of declaration under Rule 57G for imported inputs.

Analysis:
The appeal involved the denial of Modvat credit to the appellants because they did not file a declaration under Rule 57G of the Central Excise Rules for the inputs they imported, specifically Valox (Synthetic Resin). The matter was initially scheduled for a hearing on the application for waiver of pre-deposit and stay of the recovery of the confirmed amount. However, with the consent of both sides, the issue was taken up for a final decision as it was deemed to be covered by a previous decision of the Appellate Tribunal. The pre-deposit amount was waived, and recovery was stayed. The appellants argued that they had filed a declaration in 1993, stating that they used Polybutylene Terephthalate Resin as their inputs for manufacturing plastics, which included the imported Valox. They explained that Valox was a trade name for a product based on P.B.T. Polybutylene Terephthalate, and they had correctly declared the corresponding sub-heading 3907.80 under the Central Excise Tariff, even though there was no direct match in the Customs Tariff.

The appellants relied on previous judgments, such as the case of K.B. Plascon (P) Ltd. v. C.C.E., Allahabad, which allowed Modvat credit based on proper declaration of inputs, and other relevant cases like R.S.P. Woollen Mills Pvt. Ltd. v. C.C.E., Meerut and C.C.E., Kanpur v. Ratan Industries Pvt. Ltd. for precedence. On the other hand, the Department argued that the appellants had declared Valox as their final product, not as an input, which was a mandatory requirement under Rule 57G. Additionally, they pointed out that the appellants did not provide evidence that Valox was a trademark of M/s. General Electric Co., USA.

After considering both sides' arguments, the judge observed that the law required manufacturers to file declarations of both inputs and finished goods to avail of Modvat credit. In this case, the appellants had complied by declaring Polybutylene Terephthalate as their input for manufacturing. The judge noted that just because the input was described under the supplier's trademark did not mean the declaration was invalid. The appellants also justified the classification change under the Customs Tariff Act. The judge highlighted that the absence of a direct match in the Customs Tariff for the Central Excise Tariff sub-heading 3907.80 was not disputed by the Department. The judge emphasized the consistent approach of the Tribunal to not deny Modvat credit solely based on discrepancies in tariff classification between the declaration and the duty paying document. Consequently, the appeal was allowed in favor of the appellants.