2008 (1) TMI 262

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....or extension of Modvat benefit to the assessee who have not followed a procedure and have not filed any declaration under Rule 57G of the Central Excise Rules, 1944?" 2. The assessee engaged in the manufacture of Drip Irrigation System claimed exemption in respect of the HDPE/LDPE pipes cleared during the period 1.10.1995 to 4.3.1996, used in manufacture of Drip Irrigation System. The contention of Revenue is that in the course of inspection of the Departmental officials at the unit of the assessee on 5.3.1996, it was found that the HDPE and LDPE pipes were manufactured and cleared by the assessee in the guise of parts of drip irrigation system. The pipes were classifiable under Chapter Heading 3917 of the Central Excise Tariff Act, 1985....

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....on of the Supreme Court in the case of M/S.FORMICA INDIA DIVISION Vs. COLLECTOR OF CENTRAL EXCISE reported in 1995 (77) ELT 511 (SC) that the assessee was entitled to have the benefit of MODVAT credit under Rule 57-G.  Aggrieved by the same, the Revenue preferred Reference Application before the first respondent Tribunal to refer the matter to the High Court on the following question of law: "Whether the Hon'ble Tribunal is correct in ordering for extension of Modvat benefit to the assessee who have not followed a procedure and have not filed any declaration under Rule 57G of the Central Excise Rules, 1944." 3. The first respondent-Tribunal dismissed the said application in Reference Order No.112/99 dated 15.10.1999 holding that ....

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....he Division Bench of this Court took the view that MODVAT credit could not be denied to the assessee on a mere technical ground that the procedure prescribed for availment of credit had not been followed at the material time.  This Court held: "Rule 56-A relating to set off of duty is a pre-cursor to the Modvat Scheme, both of which are schemes intended to obviate cascading effect of duty paid at various intermediate stages." This Court held that since the assessee was claiming exemption and at that point of time, it was not possible for the assessee to have complied with the procedural requirements for availing MODVAT credit, it was not open to the Department to deny the MODVAT credit on the technical ground that the procedure p....