1996 (9) TMI 424 - AT - Central Excise

Summary

Issues:
Delay in filing Modvat declaration leading to denial of credit and imposition of penalty.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the delay in filing Modvat declaration by the appellants, resulting in the denial of credit and imposition of a penalty. The appellants had initially filed a declaration by post on 3-6-1994, but the Assistant Collector noted that the credit had been taken since 1-5-1994, which was before the declaration was sent and not received in the office. Subsequently, another declaration was filed on 10-11-1994 after the show cause notice was issued. The Assistant Collector held that since the Modvat declaration was not filed before utilization as required under Rule 57G, the credit should be denied, and a penalty imposed.

The appellants argued that although there was a delay in filing the declaration, the inputs were received and utilized for the intended purpose. They relied on Tribunal's precedent in Collector of Central Excise v. Shimoga Steels Ltd., which suggested that a mere delay in filing the declaration should not result in disallowing the credit. The appellants requested a waiver of the pre-deposit of the credit amount and the penalty, urging the appeal to be heard based on their submissions.

The Departmental Representative acknowledged the delay in filing the declaration and contended that the credit had been wrongly availed due to the delay, justifying the Assistant Collector's decision. However, the Department had no objection to waiving the pre-deposit and proceeding with the appeal based on the submissions made.

After considering the arguments, the Tribunal noted the delay in filing the required declaration but also recognized that the inputs were ultimately declared and utilized for manufacturing. The Tribunal decided to waive the pre-deposit of the amount in question and proceeded to hear and dispose of the appeal due to the minor issue involved. The Tribunal distinguished the cited case involving Rule 57H, emphasizing the importance of filing the declaration before availing the credit. Despite upholding the penalty imposed on the appellants, the Tribunal set aside the order disallowing the credit, modifying the lower authorities' decisions accordingly.

In conclusion, the Appellate Tribunal CEGAT, New Delhi ruled in favor of the appellants by waiving the pre-deposit and setting aside the disallowance of credit while upholding the penalty imposed due to the delay in filing the Modvat declaration.