ORDER
S. Kalyanam, Vice President
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Hyderabad, dated 26-12-1991.
2. Sh. Natarajan, the learned Consultant, submitted that the short issue for consideration in the present appeal is whether the appellant would become ineligible to take Modvat credit on the only ground that the declaration filed by the appellant in terms of Rule 57G of the Central Excise Rules was filed in the office of the Collector of Central Excise, Hyderabad, though addressed to the Asstt. Collector, as held in the impugned order. The learned Consultant submitted that a declaration was filed addressed to the Asstt. Collector and handed over in the office of the Collector of Central Excise and acknowledged in the office of the Collector. The Collector had forwarded the papers to the same Asstt. Collector after two months. The department initiated proceedings against the appellant on the ground that the appellant was not eligible to take Modvat credit by filing a declaration in the office of the Collector and also not entitled to take Modvat before getting the date of acknowledgement from the Asstt. Collector concerned.
3. Sh. Natarajan contended that filing of a declaration is mandatory and the mere fact that a proper declaration addressed to the proper authority was filed in the office of the Collector of Central Excise would not be a ground for denying the appellant the benefit of Modvat. Even if there is a procedural infraction, that would not affect the rights or eligibility of the appellant to take Modvat credit under law. The learned Consultant submitted that if there is a delay in the office of Collector in forwarding the declaration to the concerned Asstt. Collector, the appellant cannot be put to disadvantage on that score.
4. Sh. Murugandi, the learned DR, submitted that the fact that the appellant had filed a declaration addressed to the Asstt. Collector and filed it in the office of Collector is not disputed by the department. The learned DR submitted that as per rules, the declaration should be filed in the office of the Asstt. Collector and not the Collector.
5. We have considered the submissions made before us. It is not disputed that a proper declaration addressed to the proper authority was filed by the appellant in the office of the Collector but not in the office of the Asstt. Collector. The mere fact that a declaration was filed in the office of Collector of Central Excise would not ipso facto disentitle the appellant from taking Modvat credit. In the present case, the appellant filed a declaration in terms of Rule 57G of the Central Excise Rules on 1-3-1990. The declaration was filed addressed to the proper officer namely, Asstt. Collector though filed in the office of Collector. This declaration has also been acknowledged by the office of Collector on 1-3-1990. The Asstt. Collector also acknowledged the receipt of the declaration on 3-5-1990. The appellant took the credit only on 6-4-1990 in the statutory records and the appellant had utilised the credit only on 13-6-1990. Therefore, it is not disputed that the duty paid inputs were indeed available when the appellant received the dated acknowledgement of the declaration from the concerned Asstt. Collector. It is also brought to our notice that the Asstt. Collector also sent a communication to avail the permission in terms of Rule 57H of the Central Excise Rules applicable to transitional provisions. The Bench of this Tribunal in the case of Kumar Power Products Pvt. Ltd. v. Collector Hyderabad, reported in 1992 (59) E.L.T. 198 (Tri.) dealing with the scope of Rule 57G has observed as under :-
On going through the records we find that on 31-3-1986 the petitioner has addressed a communication to the Asst. Collector purporting to be a declaration under Rule 57-G of the Modvat Rules. This was presented with the Range Supdt., Hyderabad and has been acknowledged by him on 31-3-1986. It has been forwarded to the Asstt. Collector, Hyderabad who had received it on 2-4-1986. It is not disputed that the inputs in question have suffered duty and the petitioner would be otherwise eligible to Modvat credit in respect of the inputs in question. Filing of a declaration under Rule 57-G is a procedural formality and in the present case the same has been done on 31-3-1986 itself to the Range Supdt. The fact that the Range Supdt. forwarded the same to the Assistant Collector in the same place only on 2-4-1986 cannot be a reason to deny the petitioner the benefit of Modvat credit. The Board has also given a clarification in this regard and for purpose of convenience the same is extracted below verbatim. –
“Date of filing of declaration
I am directed to refer to certain doubts raised by the Trade with regard to the date from which the Modvat facility is to be availed of i.e., the date of receipt of the application by the Range Officer or the date of receipt of the application by the Assistant Collector.
Board is of the view that credit under the Modvat scheme has to be allowed to the party from the date on which the declaration is filed by them either with the Range Supdt. or the Asst. Collector. It is the duty of the Range Officer to send the declaration to Assistant Collector immediately after verification.”
(vide Board’s F. No. 267/1/87-CX. 8, dated 5-2-1987).
6. The Bench of the Tribunal in the case of Metalfab Industries Pvt. Ltd. v. CCE, Delhi, reported in 1994 (74) E.L.T. 734 has held that filing of a declaration in the range office of the Supdt. is sufficient compliance with the requirement of Rule 57G(1) and has also referred to the ratio of the ruling in the case of Chetna Industries v. Collector reported in 1993 (63) E.L.T. 344. The purpose of filing a declaration is only to enable the department to allow the Modvat credit and the Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner reported in 1991 (55) E.L.T. 437 (SC) has emphasised the distinction between the procedural condition of a technical nature and the substantive condition in law and has held that non-observance of the former would be condonable. This Bench in the case of British Physical Laboratories v. Collector, Bangalore, reported in 1994 (74) E.L.T. 593 has held that when the inputs are eligible for Modvat credit but when a declaration has been filed in terms of Rule 57G in regard to the inputs in question, the fact that there was a procedural irregularity would not ipso facto disentitle the manufacturer otherwise entitled to avail the Modvat credit. In other words, a procedural infraction of a technical nature and non-observance of the procedural formality should not stand in the way of a party getting the benefit of Modvat under the Modvat scheme, when there is otherwise substantial compliance. Therefore, in the fact and circumstances, having regard to the facts set out above, we are of the view that the impugned order is not sustainable and in this view, the same is set aside and the appeal is allowed.
V.P. Gulati, Member (T)
7. I observe that in terms of Rule 57G of the Central Excise Rules, 1944 the requirement is that Modvat Credit can be taken only after a declaration as prescribed under Rule 57G is filed and a dated acknowledgement for the same is obtained from the concerned AC. We have in a number of cases held that so far as filing of declaration is concerned, the same is mandatory and cannot be treated merely as a procedural requirement. In all these cases where declaration had not been filed and Modvat Credit had been taken we have ordered reversal of the same. The Hon’ble Supreme Court in a case where filing of declaration had prescribed as a pre-requisite for the purpose of availing of the benefit of the Notification in the case of Indian Aluminium Co. Ltd. v. Thane Municipal Corporation reported in 1991 (55) E.L.T. 454 (SC) have held as under :
having failed to file necessary declaration the company cannot turn around and ask the authorities to make verification of some records. The verification at the time when the raw material was still there is entirely different from verification at a belated stage after the articles have ceased to be there.
The Tribunal also following the ratio of the ruling of the Supreme Court cited supra and also the Gujarat High Court in the case of Navsari Oil Products v. Collector of Central Excise reported in 1992 (60) E.L.T. 550 wherein the Hon’ble High Court has followed the decision of the Supreme Court while upholding the order of the Collector (Appeals) by reason of non-filing of declaration, the benefit has been denied. The Collector (Appeals) in that case has held as under:
The condition (b) is a very important condition i.e. a person wanting to avail of the concession under the aforementioned Notification must maintain an account in a manner specified by the AC of Customs. Therefore, only an importer, who is an actual user, who wants to avail of the concession under the aforementioned Notification must move the AC of Customs claiming the concession under the Notification. Once he does so, the AC of Customs has to design the methodology of accounting for the purpose of this Notification. This is a pre-condition of the Notification.
From the above what follows is that requirement of filing of declaration and obtaining dated acknowledgement is a pre-requisite for availing of the benefit when the benefit is contingent upon filing of a declaration.
8. In the present case, the plea is that the appellant had filed declaration addressed to the AC in the Office of the Collector of Central Excise and the said declaration had been received by the Assistant Collector concerned after a period of two months and which was then acknowledged by the AC. The appellant in the meanwhile had taken Modvat Credit in respect of the inputs and also utilised the same on 13-6-1990. The declaration was filed with the Collector on 1-3-1990 and acknowledged by the AC on 3-5-1990. The plea is that the declaration filed in the Office of the Collector has been acknowledged by the Office of the Collector of Central Excise and therefore, the requirement of Rule 57G of filing a declaration and receiving a dated acknowledgement can be taken to have been complied with. I observe that so far as filing of declaration is concerned, if the rule or a Notification prescribes that a declaration should be filed before a particular officer, the said declaration should be filed before the said officer only and dated acknowledgement obtained from the same officer as this is the condition precedent for availing of the benefit envisaged. I observe that filing of a declaration in the office of the Collector cannot be taken to be in conformity with the requirement under Rule 57G. However, it is seen from the facts in this case that duty paid inputs as observed in para 5 of the order were available when the appellant received the dated acknowledgement of the declaration from the concerned AC and the appellant had availed and utilised the credit only on 13-6-1990. The question therefore, in the facts and circumstances of this case to be considered is when the inputs were lying unutilised on 3-5-1990 when credit was taken when dated acknowledgement was given, whether Modvat Credit taken on 6-4-1990 can be said to be validly taken and later utilised on 13-6-1990. We have in a number of cases held that in case the inputs are received prior to the filing of declaration Modvat Credit in respect of the same can be taken under Rule 57A after declaration had been filed and acknowledged by the AC notwithstanding the receipt of the inputs before filing of declaration. In the present case therefore, in terms of Rule 57G, the declaration can be taken to have been filed and acknowledged only on 3-5-1990, the appellant’s eligibility to take Modvat Credit in respect of the inputs which had been received can be taken to have been established with reference to that date i.e. 3-5-1990 only and since the inputs were lying on stock on that date Modvat Credit could be taken to have been available on 3-5-1990 in respect of the inputs which were utilised after that date. In view of above, I hold that in the facts and circumstances of this case, Modvat Credit utilised on 13-6-1990 was also correctly utilised. In view of the above, the appeal is allowed.