2001 (7) TMI 570 - AT - Central Excise

Appeal success: Modvat credit allowed, reduced penalty upheld.

JCT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH

JCT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH - 2001 (135) E.L.T. 80 (Tri. - Del.) Issues:Appeal against disallowance of Modvat credit and penalty imposition.Analysis:The appeal was filed against the disallowance of Modvat credit and the penalty imposed on the appellant. The appellant, a manufacturer of cotton yarn and fabrics, had availed of Modvat credit on duty paid inputs. The issue arose when they received a consignment of a chemical named 'SPACOSTAT' and failed to file a declaration under Rule 57G in time. The appellant requested condonation of the delay in filing the declaration, citing valid reasons for the delay. The Assistant Commissioner disallowed the Modvat credit and imposed a penalty, stating that the credit was taken after the expiry of six months from the date of the invoice.The appellant argued that they met all conditions for the proviso to Rule 57G(5) and provided valid reasons for the delay in filing the declaration. They contended that the limitation of six months was not applicable as the requirement was introduced after the entry of the goods in their records. The appellant relied on a previous decision to support their case for condonation of delay.The Departmental Representative countered the appellant's submissions, stating that the provisions of Rule 57G were applicable at the time the credit was taken. The Assistant Commissioner found the reasons for condoning the delay unsatisfactory and upheld the penalty imposition for taking credit after the six-month limit without filing the declaration.The Tribunal analyzed the submissions and relevant rules. Rule 57G(5) allows for condonation of delay in filing declarations under specific conditions. The Tribunal found that the appellant had explained the reasons for the delay and fulfilled the necessary conditions for condonation. The Tribunal held that the delay in filing the declaration was condonable under Rule 57G(5) and that the condition of taking credit within six months did not apply after the delay was condoned. However, the Tribunal upheld the penalty imposition as the credit was taken before the delay was condoned, albeit reducing the penalty amount.In conclusion, the Tribunal partly allowed the appeal, stating that the appellant was eligible to avail of the Modvat credit after the delay was condoned, while also affirming the liability for a reduced penalty amount.