1999 (12) TMI 513 - AT - Central Excise

Summary

Issues:
- Classification of inputs under different Chapter sub-headings in declaration and invoice for Modvat credit eligibility.

Analysis:
The dispute in this case revolves around the classification of inputs for Modvat credit eligibility. The respondents declared the inputs as "Mineral Based Special Purpose Oil" falling under Chapter Heading 2710 in their declaration, while the invoice classified the goods under Chapter 3404. The department argued that the correct classification was crucial for availing Modvat credit and contended that the respondents contravened Rules 57A and 57G by not providing the accurate Chapter heading or sub-heading in the declaration. The department relied on a previous Tribunal decision to support its stance that incorrect description in the declaration could lead to denial of Modvat credit.

On the other hand, the respondents maintained that the item clearly fell under Chapter 27 as declared, despite the invoice stating otherwise under Chapter 34.04. They explained that the oil was essential for the slotting process, integral to manufacturing their final products. The respondents argued that discrepancies in the manufacturer's description or tariff heading on the invoice should not impede Modvat credit if the inputs were indeed used in the manufacturing process. They cited various case laws to support their position.

The Tribunal analyzed the case, focusing on the discrepancy between the declaration and the invoice. It noted that the respondents provided a detailed description of the inputs and their use in the manufacturing process, emphasizing that the oil was crucial for slotting, a necessary step in production. The Tribunal highlighted that the items in the invoice pertained to artificial waxes and prepared waxes under Chapter 34, not the mineral-based oil for slotting under Chapter 27. Since the department failed to prove that the received goods were unsuitable for manufacturing the final products, the discrepancy in classification between the declaration and invoice was deemed insufficient to deny Modvat credit. The Tribunal distinguished previous cases where the final product was not declared, emphasizing that as long as the inputs were used in manufacturing the final products, discrepancies in the declaration did not bar Modvat credit.

Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision to allow Modvat credit on Sulnit UG Oil to the respondents, rejecting the department's appeal.