1996 (2) TMI 210 - AT - Central Excise

Summary

Issues:
Interpretation of Tariff Heading for MODVAT Credit eligibility

Analysis:
The case involved a dispute regarding the utilization of MODVAT Credit by manufacturers of insulated wires and cables. The appellants used inputs described as "wire of non-alloy steel" in their declaration under Rule 57G, while the department contended that the inputs were actually "wire of non-alloy steel coated with zinc." The Collector denied the MODVAT Credit based on the discrepancy in the description, citing different rates of duty for the two products under Tariff Heading 7217.90. The appellants argued that the department had accepted the declaration previously and that the minor discrepancy should not affect their eligibility for the credit.

The Learned Advocate for the appellants argued that as long as the declaration matched the Tariff description and the department had accepted it, any minor discrepancies should be overlooked. He emphasized that both types of wires were specified inputs for MODVAT Credit, and the appellants acted in good faith based on Tribunal judgments and trade notices. The department, represented by the Learned DR, maintained that the products were distinct due to different duty rates and that the appellants violated the Rules by using inputs not as per the declaration.

The Tribunal, after considering the arguments and perusing the records, noted that both types of wires were specified inputs for MODVAT Credit and classified under the same Tariff sub-heading. Referring to previous judgments, the Tribunal held that procedural lapses should not hinder substantive statutory rights, and minor discrepancies in declarations should not deny the benefit of MODVAT Credit. The Tribunal cited cases where benefit was granted despite discrepancies in declarations, emphasizing that as long as the benefit was available and the inputs were specified, denial of credit was not justified. The Tribunal also highlighted that differing duty rates should not be a ground for denial of MODVAT Credit.

In light of the Tribunal's analysis and previous judgments, the impugned orders denying the MODVAT Credit were set aside, and the appeals were allowed. The decision reaffirmed that technical variations in declarations should not hinder legitimate claims for MODVAT Credit when the specified inputs are utilized, even if there are minor discrepancies in descriptions.