2000 (4) TMI 668 - AT - Central Excise

Summary

Issues:
Challenge to Order-in-Appeal disallowing Modvat credit; Application for permission under Rule 57H; Limitation period for invoking Modvat credit.

Analysis:
The appeal involved a challenge by M/s. Bata India Ltd. against the Order-in-Appeal disallowing Modvat credit by the Commissioner of Central Excise (Appeals), Calcutta. The appellant, a footwear manufacturer, sought credit for inputs under the Modvat credit scheme from 1-3-87. The dispute arose as the appellant did not obtain permission under Rule 57H of the Central Excise Rules, 1944, for the inputs received prior to 1-3-87. The Assistant Collector disallowed the credit and imposed a penalty, which was upheld at the first appeal stage.

The appellant argued that all relevant facts were disclosed to the Department, and there was no need to invoke a longer limitation period of 5 years. The appellant contended that they had applied for permission to avail Modvat credit, even though Rule 57H was not explicitly mentioned in the application. The appellant highlighted that they had informed the authorities about the proportion of credit related to dutiable and exempted footwear. The Superintendent allowed a portion of the credit to be debited back after examination of records.

The Revenue argued that the appellant never applied for specific permission under Rule 57H, defending the disallowance of credit. However, the Tribunal found that the appellant had made a due declaration and requested credit for inputs received before 1-3-87, despite not mentioning Rule 57H. The Tribunal considered the failure to mention the rule as a technical irregularity that should not bar the appellant from enjoying the substantive right to Modvat credit. Referring to precedent cases, the Tribunal held that the procedural irregularity could be regularized after verification by the Assistant Collector.

Based on the findings, the Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant. The decision emphasized that the failure to mention Rule 57H should not disqualify the appellant from availing Modvat credit, considering it a technical lapse that did not negate the substantive right to credit.