1998 (12) TMI 228 - AT - Central Excise

Tribunal grants Modvat credit despite late filing, citing valid reasons for delay

The Tribunal allowed the appeal in favor of the appellant, M/s. Luxmi Steel Rolling Mills, granting them the right to avail of Modvat credit despite the ... Modvat - Declaration filed after receipt of inputs Issues involved: Whether Modvat credit can be availed of when the declaration under Rule 57G is filed late.Analysis:Issue 1: Modvat credit availed with late filing of declarationThe appellant, M/s. Luxmi Steel Rolling Mills, availed Modvat credit amounting to Rs. 1,54,397/- in March/April 1995 but filed the declaration under Rule 57G of the Central Excise Rules on 28-4-1995. The delay in filing the declaration ranged from 4 days to 33 days. The appellant argued that the delay was due to the negligence of the Excise Clerk and the ill-health of a partner. Rule 57G(5) allowed the Assistant Commissioner to condone the delay if sufficient cause was shown by the manufacturer. The appellant contended that the delay was not inordinate and that the duty paid nature of the inputs and their use in manufacturing final products were not disputed by the department. The appellant also cited a relevant case law to support their position.Issue 2: Rejection of Modvat credit due to late declarationThe Deputy Commissioner disallowed the Modvat credit as the Assistant Commissioner did not condone the delay in filing the declaration late, and the rejection of condonation was considered final. However, the appellant claimed they did not receive the rejection of their application for condonation of delay, as indicated by their submissions during the hearing before the Deputy Commissioner. The appellant argued that they could have availed of the Modvat credit under Rule 57H of the Rules even if the declaration was filed late.Judgment and ConclusionThe Tribunal observed that Rule 57G(5) allowed for condonation of delay in filing the declaration under sufficient reasons. The Tribunal noted that the conditions for availing Modvat credit were duly met by the appellants, and the denial of credit was solely based on the late filing of the declaration. The Tribunal accepted the appellant's explanation for the delay, attributing it to the negligence of the Excise Clerk and the ill-health of a partner. The Tribunal found that the reasons provided were sufficient, and in the circumstances of the case, the delay in filing the declaration was condonable. As a result, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, granting them the right to avail of the Modvat credit despite the late filing of the declaration.This detailed analysis of the judgment highlights the key arguments presented by both parties, the relevant legal provisions, and the Tribunal's reasoning leading to the final decision in favor of the appellant.