1994 (4) TMI 154 - AT - Central Excise

Tribunal Upholds Denial of Modvat Credit on Fully Manufactured Goods, Remands for Input Stock Reconsideration

The Tribunal upheld the lower authorities' decision denying Modvat credit on fully manufactured goods but remanded the case for re-consideration of Modvat ... Modvat Credit Issues:Modvat credit on inputs lying in stock as on 1-3-1986 and inputs used in outputs during 1-3-1986 to 14-3-1986.Detailed Analysis:The appeal was against the order of the Collector (Appeals) regarding Modvat credit on inputs. The Appellants, manufacturers of springs and leaves of iron steel, filed a MODVAT DECLARATION on 11-3-1986 seeking permission to avail Modvat on stock of inputs as of 1-3-1986. Subsequently, they submitted a fresh application under Rule 57H providing full details of stocks/receipt of inputs on duty-paying documents. The Assistant Collector denied the benefit, citing late submission and lack of physical verification of stock as of 1-3-1986.The Appellants argued that despite not explicitly mentioning Rule 57H in their declaration, their request should have been allowed based on the records maintained by them. They highlighted that Rule 57H allows benefits for inputs in stock and those used in final products. The Departmental Representative (DR) opposed, emphasizing the importance of physical verification and AC's satisfaction for granting benefits under Rule 57H.The Tribunal noted that the Appellants' declaration under Rule 57A and 57G, mentioning their request for credit on inputs as of 1-3-1986, could be considered as a request under Rule 57H as well. The Tribunal stressed that during the transitional period of the new scheme, guidance should have been provided to the Appellants for further details verification. The purpose of Rule 57H being transitional, insistence on strict compliance at the inception of the scheme was deemed unjustified.However, the Tribunal clarified that Rule 57H does not allow benefits for fully manufactured goods in stock, only for inputs. Therefore, the order of lower authorities regarding credit claimed on final products was upheld, but the decision was remanded for re-consideration regarding inputs in stock on 1-3-1986, subject to the Appellant providing relevant documents and AC's satisfaction.In conclusion, the Tribunal upheld the lower authorities' decision on final products but remanded the case for re-consideration of the Modvat credit on inputs in stock on 1-3-1986, emphasizing the transitional nature of the scheme and the need for proper verification and documentation.