2002 (1) TMI 1025 - AT - Central Excise

Failure to Account for Items in Statutory Records Leads to Dismissal of Appeal with Rs. 52,437 Demand

ATMA TUBE PRODUCTS LTD. Versus COMMISSIONER OF C. EX., CHANDIGARH

The appeal was dismissed as the party failed to properly account for items in their statutory records while availing Modvat credit, leading to a demand of ... Modvat/Cenvat - Modvat on inputs Issues:1. Availing Modvat credit without proper accountal in statutory records.2. Dispute regarding entry of goods in RG 23A Pt-I.3. Interpretation of Rule 57G(7) regarding maintenance of accounts.Issue 1: Availing Modvat credit without proper accountal in statutory recordsThe appellants manufactured Cold Rolled Strips & C.R. Steel Tubes and availed Modvat credit on various inputs under Rule 57A and Rule 57Q of Central Excise Rules, 1944. However, they failed to account for certain items in their statutory records as required by the rules. Consequently, a show cause notice was issued to recover the amount of Rs. 52,437/- under Rule 57-I. The Assistant Commissioner observed that the party did not account for these items in their records and could not provide evidence that the goods had been received and utilized in the manufacture of final products. Therefore, the demand of Rs. 52,437/- was confirmed under Rule 57-I.Issue 2: Dispute regarding entry of goods in RG 23A Pt-IThe party appealed the decision, arguing that although they recorded the Modvat credit in RG 23A Pt-II, there was no corresponding entry in Pt-I regarding the receipt of goods for which the credit was availed. The party contended that there was no allegation that the goods were not received or utilized in manufacturing final products. They relied on previous Tribunal decisions where oversight in making entries did not negate the substantive compliance with the rules. However, the Tribunal noted that in the present case, the failure to make entries in Pt-I was not due to oversight but a deliberate assertion that such entries were unnecessary. The Tribunal emphasized the clear provisions of Rule 57G(7) requiring maintenance of accounts for duty payable on final products and upheld the lower authorities' findings that there was no proof of goods being received and consumed in manufacturing final products. Consequently, the appeal was dismissed.Issue 3: Interpretation of Rule 57G(7) regarding maintenance of accountsThe Tribunal clarified that the appellants' argument of not needing to make entries in Pt-I of Form RG 23A as a matter of right was untenable in light of Rule 57G(7) mandating the maintenance of accounts for duty payable on final products. The Tribunal highlighted the importance of complying with the clear provisions of the rule and reiterated that without evidence of goods being received and utilized in manufacturing final products, the appeal lacked merit and was accordingly dismissed.