1998 (7) TMI 397 - AT - Central Excise

Summary

Issues:
Delay in filing Modvat declarations for availing credit on capital goods under Rule 57T.

Analysis:
The ld. Commissioner (Appeals) found that most declarations were filed after significant delays, some even after three months from the receipt of capital goods. Rule 57T(1) mandates filing declarations within one to three months, with the Asstt. Commissioner having discretion to condone delays up to three months. The Asstt. Commissioner refused to condone delays beyond three months, emphasizing the need for satisfactory cause. The Appellants cited late awareness of Notification No. 39/94-C.E. as the reason for delay, but the Asstt. Commissioner deemed it insufficient. The Commissioner upheld the disallowance of Modvat credit due to untimely declarations.

The Appellants contended that they were unaware of Modvat credit on capital goods for woolen yarn until 22-12-1994, following a fax message. They filed 44 declarations, with only four exceeding the three-month deadline. The Appellants argued that the delay should be condoned under Rule 57T(1) proviso, which allows for condonation on showing sufficient cause. The Asstt. Commissioner's denial was based on the belief that the Appellants were already aware of the capital goods provisions, which the Appellants disputed, asserting their diligent efforts to comply upon learning about the new Modvat credit eligibility.

The JDR contended that the Appellants, not being new entrants, should have been aware of Notification No. 39/94-C.E. The Asstt. Commissioner's decision was supported, noting the Appellants' failure to file declarations promptly, especially in four cases exceeding the three-month limit. The JDR argued that negligence led to the disallowance of Modvat credit, urging the rejection of the Appeal.

Upon review, the Tribunal found that the Appellants' explanation for the delay was satisfactory, attributing it to late notification awareness. The Tribunal disagreed with the Asstt. Commissioner's conclusion that the Appellants were already availing Modvat credit for woolen yarn, deeming it unsubstantiated. Considering the evidence and submissions, the Tribunal held that sufficient cause was demonstrated, warranting the condonation of delays up to three months. Consequently, Modvat credit on capital goods for woolen yarn was allowed for all but four declarations, as specified.

In conclusion, the Tribunal overturned the lower authorities' decisions and granted Modvat credit on capital goods for woolen yarn to the Appellants, except for specific declarations, based on the satisfactory cause shown for the delay in filing the Modvat declarations within the prescribed timeline.