1997 (10) TMI 187 - AT - Central Excise

Tribunal emphasizes Rule 57G: Failure to declare inputs disallows Modvat credit

COLLECTOR OF CENTRAL EXCISE, NEW DELHI Versus BRASSCO INDIA

The Tribunal allowed the appeal by the Collector of Central Excise, New Delhi, overturning the decision of the Collector of Central Excise (Appeals) ... Modvat - Declaration not filed in respect of input copper wire scrap Issues:- Challenge to rejection of appeal by Collector of Central Excise (Appeals)- Admissibility of Modvat credit for copper wire scrap- Compliance with Rule 57G of Central Excise Rules, 1944- Non-declaration of input in the declaration- Applicability of Tribunal decisions on Modvat creditAnalysis:The case involves an appeal by the Collector of Central Excise, New Delhi against the rejection of an appeal by the Collector of Central Excise (Appeals) regarding the dropping of adjudication proceedings against the respondent for recovery of an amount and imposition of penalty. The Additional Collector had allowed Modvat credit for copper wire scrap, stating that permission obtained for clearing the scrap for manufacturing copper tubes constituted substantial compliance with Rule 57G of the Central Excise Rules, 1944. The Collector (Appeals) upheld this decision, leading to the current appeal.The appellant's counsel argued that Modvat credit could not have been taken without declaring the copper wire scrap as input. The respondent cited various Tribunal decisions to support their position that non-declaration of the input should not disallow Modvat credit. However, the Tribunal found that the cited decisions did not support the respondent's claim, emphasizing that the declaration under Rule 57G did not include the copper wire scrap, which is a mandatory requirement for availing Modvat credit.The Tribunal noted that the respondent's plea of inadvertent omission of procedural nature was not sufficient to justify the non-declaration of the input. The Assistant Collector's permission for movement of the scrap was deemed by the respondent as substantial compliance with Rule 57G, but the Tribunal disagreed, stating that the failure to declare the input goes against the respondent. The Tribunal highlighted the mandatory nature of declaring inputs under Rule 57G and clarified that any relaxation in filing the declaration within six months was not applicable at the material time.Ultimately, the Tribunal set aside the impugned order, allowing the appeal and ordering the recovery of Modvat credit for the undeclared inputs, except for the amount already reversed by the respondent. The cross-objection seeking to uphold the impugned order was dismissed as the appeal was allowed.