2001 (2) TMI 630 - AT - Central Excise

Summary

Issues:
1. Availing Modvat credit on inputs without filing a declaration.
2. Denial of Modvat credit by the Assistant Commissioner.
3. Contention regarding the correct classification of the input.
4. Application for condonation of delay in filing the declaration.
5. Appeal against the order of the Commissioner (Appeals).

Issue 1: Availing Modvat credit on inputs without filing a declaration

The appellant, a manufacturer of watch components and clock parts, availed Modvat credit on inputs without filing a declaration as required by Rule 57A of the Central Excise Rules, 1944. The Assistant Commissioner initiated proceedings against them for taking Modvat credit without filing a declaration for free cutting stainless steel rods. The appellant availed credit of Rs. 18,276 on this input, leading to a demand confirmation by the Assistant Commissioner.

Issue 2: Denial of Modvat credit by the Assistant Commissioner

The Assistant Commissioner, in his order, denied the Modvat credit to the appellants citing a violation of Rule 57G(2) due to a failure to apply for condonation of delay in filing the declaration. The denial was based on the grounds that the party did not seek condonation of delay, leading to the rejection of Modvat credit. The Assistant Commissioner's decision was upheld by the Commissioner (Appeals), resulting in the appellants filing an appeal against this order.

Issue 3: Contention regarding the correct classification of the input

The appellant's representative contended that the declaration filed by the appellants on 13-9-1993 classified stainless steel rods under Heading 72.20 instead of 72.22, which was the correct classification. Despite the incorrect classification in the declaration, the representative argued that the credit taken by the appellants on 23-4-1994 was covered by the initial declaration. The representative emphasized that mentioning a wrong classification should not prevent the appellants from availing Modvat credit on inputs.

Issue 4: Application for condonation of delay in filing the declaration

The appellant's representative highlighted that although the declaration for the input was filed after taking the credit, it was submitted that the credit was utilized only after the acknowledgment of the declaration was received. The representative pointed out the provision under Rule 57G(5) for condonation of delay in case of late submission of the declaration, which was not applied by the appellants. The argument was made that the delay in filing the declaration should have been condoned by the Assistant Commissioner.

Issue 5: Appeal against the order of the Commissioner (Appeals)

The appeal was made against the order of the Commissioner (Appeals) who upheld the denial of Modvat credit by the Assistant Commissioner. During the hearing, the appellant's representative contested the findings of the Assistant Commissioner and argued for the condonation of the delay in filing the declaration. The Tribunal, upon considering the submissions, found that the denial of Modvat credit solely based on the failure to apply for condonation of delay was unjustified. Consequently, the appeal was allowed, and relief was granted to the appellants.

This judgment highlights the importance of complying with procedural requirements for availing Modvat credit on inputs under the Central Excise Rules. It also underscores the significance of applying for condonation of delay in filing declarations to prevent the denial of credit. The decision emphasizes the need for a balanced approach by the authorities in considering such cases and granting relief based on the facts and circumstances presented.