1993 (10) TMI 178 - AT - Central Excise

Manufacturing company wins appeal on Modvat scheme; Tribunal clarifies tariff heading change rules.

INDIA TIN INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE, BANGALORE

The appellant, a manufacturing company, successfully challenged the Collector's orders related to the Modvat scheme. The Tribunal ruled in favor of the ... Modvat Credit - Declaration Issues:1. Interpretation of Modvat scheme regarding availing credit for metal containers and painted/lacquered sheets.2. Requirement of filing revised declaration under Rule 57G after a change in tariff heading.3. Bar on limitation for issuing show cause notice.4. Allegation of intention to evade payment of duty.5. Classification of printed sheets under painted/lacquered/varnished sheets.Detailed Analysis:1. The appellant, a manufacturing company, filed two appeals against orders by the Collector of Central Excise regarding the Modvat scheme. The issue involved irregular availment of Modvat credit for metal containers and painted/lacquered sheets. The appellant contended that they had followed all necessary procedures for availing Modvat credit, including filing proper declarations and maintaining records. The Department alleged that a fresh declaration should have been filed after a change in the tariff heading, which the appellant argued was unnecessary as there was no change in the goods or duty implications. The appellant cited various rulings supporting their position, emphasizing that the purpose of the Modvat scheme is to inform the Department of the manufacturing process and input eligibility, not to repeatedly file declarations for unchanged circumstances.2. The central issue revolved around the requirement of filing a revised declaration under Rule 57G after a change in the tariff heading. The appellant argued that the existing declaration sufficed as there were no changes in the goods, duty, or input nature. The Tribunal analyzed the submissions and rulings, concluding that the appellant's eligibility for Modvat credit remained unaffected by a mere change in the tariff heading. The Tribunal emphasized that the Department was aware of the manufacturing activities through detailed documentation, rendering the show cause notice issued on the alleged irregularities time-barred. The Tribunal rejected the adjudicating authority's finding of an intention to evade duty, noting the substantial duty payments made by the appellant.3. The issue of limitation for issuing a show cause notice was raised by the appellant. The Tribunal agreed that the show cause notice issued by the Department was barred by limitation under the Central Excises and Salt Act, 1944. The Tribunal highlighted that the Department was fully informed of the appellant's activities through filed documents, and the alleged irregularities did not warrant the notice issued after the specified period.4. The appellant challenged the allegation of an intention to evade payment of duty. The Tribunal found no basis for this allegation as there were no changes in duty, product, or input, and the appellant had diligently paid substantial amounts towards duty obligations. The Tribunal emphasized that the tariff heading change had no revenue implications, and the appellant's entitlement to Modvat benefits remained intact.5. The classification of printed sheets under painted/lacquered/varnished sheets was a key aspect of the dispute. The Tribunal considered the clarifications issued by the Board and the Government of India, supporting the inclusion of printed sheets under the relevant tariff heading. The Tribunal concurred with the clarifications and rulings, ultimately setting aside the impugned order related to the appellant's appeal concerning the Modvat scheme. In a separate appeal by the Department, the Tribunal upheld the Collector's decision regarding the classification of printed sheets, aligning with the previous findings and clarifications.