1996 (11) TMI 183 - AT - Central Excise

Retrospective Application of Rule 57G(5) for Modvat Credit

The Tribunal held that Rule 57G(5) of the Central Excise Rules, 1944 applies retrospectively, allowing credit for inputs received before filing a ... Reference to High Court - Modvat Issues:1. Whether Rule 57G(5) of the Central Excise Rules, 1944 is applicable retrospectively.2. Whether Rule 57G prohibits taking credit on inputs received prior to filing of declaration.3. Whether credit can be allowed under Rule 57A for inputs without a filed declaration.Analysis:1. The reference application sought clarification on the retrospective applicability of Rule 57G(5) of the Central Excise Rules, 1944. The Revenue contended that the filing of a declaration under Rule 57G is a pre-condition for availing credit, citing previous Tribunal decisions. They argued that non-filing of the declaration should not entitle the appellants to Modvat credit.2. The Tribunal acknowledged the Revenue's arguments but noted that the rule was subsequently amended to include sub-rule (5), allowing credit for inputs received before filing a declaration if the manufacturer was unable to file it earlier. The Tribunal emphasized that in cases where the goods were initially considered duty-free but later became dutiable, the failure to file a declaration should not prevent credit. The Tribunal referred to past judgments supporting this view.3. The Tribunal found that the appellants could not file a declaration as they believed the final products were exempted from duty. When the classification changed, they were required to pay duty. Despite the non-filing of the declaration, the Tribunal held that Modvat credit should be granted in such unique circumstances. The Tribunal concluded that the issue was settled law and did not warrant a reference to the High Court, as it had been addressed in previous Tribunal judgments.4. After considering the arguments from both sides and reviewing the reference application, the Tribunal observed that the Revenue's concerns were based on general principles, while the present case involved specific facts where the appellants were allowed to clear goods as exempted. The Tribunal upheld the established law that Modvat credit should be granted in situations where the non-filing of a declaration was not fatal, especially when all necessary records were maintained. The Tribunal deemed the issue straightforward and not requiring a reference to the High Court.5. Consequently, the Tribunal found no question of law necessitating a reference to the High Court and rejected the application, emphasizing that the matter had been addressed in various Tribunal judgments and did not present a novel legal issue warranting further adjudication.