1995 (3) TMI 191 - AT - Central Excise

Tribunal rules for appellants in Modvat credit case, order exceeded jurisdiction

ROCK STONE INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE, JAIPUR

ROCK STONE INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE, JAIPUR - 1995 (77) E.L.T. 341 (Tribunal) Issues:Classification of inputs for Modvat credit disallowance due to incorrect declaration.Analysis:The case involves a small scale unit manufacturing Synthetic Organic Dyes using Anthranilic Acid as an input. The issue arose when Modvat credit of Rs. 13,925 was disallowed because gate passes showed incorrect classification under Chapter Heading 2942.00 instead of 2922.00. The appellants rectified the declaration to include all relevant sub-headings after discovering the error in classification by a supplier.The advocate argued that the Collector erred by going beyond the show cause notice, directing penalty imposition and duty demand from the beginning, which was not part of the appeal. Citing legal precedents, the advocate contended that the Collector's actions exceeded jurisdiction. It was emphasized that Modvat credit eligibility was not disputed, urging for immediate appeal allowance.The Department reiterated the need for correct product classification in declarations, supporting the Collector's stance. However, during the hearing, it was highlighted that the Collector's remand order extended beyond the issues under appeal, potentially impacting the appellants adversely.The Tribunal analyzed the Collector's order and determined that it overstepped the jurisdiction by addressing matters not subject to appeal. Legal principles were cited, emphasizing that in the absence of an appeal or cross-objections by the Department, the Tribunal lacked the authority to enhance assessments. Precedents were referenced to support the position that classification discrepancies in declarations did not invalidate Modvat credit eligibility.Considering the legal arguments and precedents, the Tribunal found in favor of the appellants. It was concluded that the Collector's order contained legal flaws by addressing non-appealed matters and straying from the show cause notice scope. Consequently, the Tribunal set aside the impugned order, allowing the appeal and dispensing with the pre-deposit requirement. The decision was based on the understanding that classification discrepancies in declarations did not impact Modvat credit eligibility as long as the correct description of inputs was provided.