ORDER
J.N. Srinivasa Murthy, Member (J)
The appeal is filed by the above partnership from against the above captioned Impugned order dated 19.02.1992 by Collector of Central Excise, Ahmedabad for quashing and setting aside the same with consequential benefit and any other deemed relief.
1. The brief facts of the case are that appellant manufactures item falling under chapter headings 84.51, 84.20, 84.43 of Tariff Act under Central Excise Licence Declaration of inputs to be brought by them under Modvat scheme was filed on 05.05.1986, which was approved by Assistant Collector, Divn. III on 28.08.1986, from the date of filing declaration. Revised declaration was filed in 22.01.1988 giving detail description of inputs by the appellant. While assessing RT12 returns and checking of documents, such as original PLA, GPS, RG23A Part I and Part II, and RT12 returns by the range Superintendent it was noticed that appellant had taken credits of duty on inputs of Rs. 75,031.50 not declared by them under Modvat such as Reduction Gear/Spares Warm Gear as against declared Reduction Gear Box both falling under Chapter 84.43, and Jigger spares, Spares for machine, Spares dreging range, Print washer against declared as Cloth guider/Frame Detwister both falling under Chapter Heading 84.51. Range Superintendent informed the appellant by his letter dated 01.02.1988, to debit the above amount wrongly credited for which appellant replied by letter dated 09.02.1988 that it is not agreeable. Again on 15.02.1988 Superintendent asked the appellant to debit the wrong credit. Appellant on 07.03.1988 replied that demanding duty was beyond his competency and proper procedure should be followed. Show cause notice was served on the Appellant on 14.02.1989 issued by the Assistant Collector of Central Excise – Div. III, Ahmedabad to show cause why Rs. 75,031.50 should not be recovered from them under rule 57-I of Central Excise Rules, and why penalty should not be imposed under rule 173Q as credit was taken wrongly by the appellant on the inputs not approved by competent authority under rule 57Q of Central Excise rules. On 03.03.1989 appellant replied it. During personal hearing on 15.03.1989 the appellant was represented by Sri. K. B. Bhavsar. He was heard. He also filed the written submission. On considering all the available material, Assistant Collector, Div. III dropped the show cause notice, holding that appellant had taken the credit and utilised it correctly. It was challenged under Section 35(4) by the department by an appeal before the Collector of Central Excise and Customs (appeals), Ahmedabad. The appeal was allowed and order-in-original was set aside under the Impugned order. Hence this appeal.
2. In support of the appeal, Sri. Paresh Dave, Advocate, has filed written submissions on 26.02.1997. He has argued that discrepancy in inputs were noticed in 1987 and on 01.02.88 Superintendent asked to debit the credit taken, and no proceedings prior to it, show cause notice was issued on 14.02.1989 for the period 29.04.1987 to 24-12-1987. Demand is clearly time barred. On behalf of Respondent, it is submitted that, in view of 01.02.1988 letter containing the demand, there is no time bar. In the reply it is urged that 5 credits are admitted not in time. There is no change in classification. Appeal has to be allowed.
3. Points for consideration are whether (a) Show cause notice is barred by time? (b) Whether the credit taken in inputs not approved by department is admissible? My findings thereon are in the (a) affirmative (b) affirmative.
4. Perused the show cause reply, letters of the Superintendent 01.02.1988 and 15.02.1988, orders of Lower Authorities, Written submissions, Annexures to Notice and declarations. Rules 57-I and Section 11A of Central Excise Act, period involved is from 29.04.1987 to 24-12-87. Show cause notice is dated 14.02.1989. Extended period is not invoked. From this it is clear that notice is issued, 1 month 20 days beyond the duration of the period. Admittedly, for the credits taken prior to 01.08.1987, the bar of limitations applies which covers to Rs. 25,278.00 were according to the Impugned Order. As per the review order and appeal memorandum before Collector (Appeals), the challenge is only with respect of IInd item Jigar Spares, Spares for Machine, Spares dreging range, Print washer as a garment the declared Cloth Guider/Frame Detwister which covers to Rs. 10,332.00 for Reduction Gear Box as per items 6 to 11 in Annexure ‘A’ to Show cause notice. So as contended by appellant, even if the entire case of department is accepted, the demand if any comes to Rs. 40,421.50 only as against Rs. 75031.50. But the Impugned order is not specific and clear in that regard. As contended by the appellant, there is no specific demand as such, and its confirmation. Since Assistant Collector has dropped the show cause notice which made the demand, and Impugned order has set it aside, and allowed the appeal. As per the relief in the appeal by department, before Collector (Appeals) under EA2, Column No. 6, original orders to be set aside, and thereby recovering Modvat credit is allowed. By Impugned order it is granted. As discussed above, it is not proper and correct. So the Impugned order cannot stand. Modvat credit disallowed confines only to Rs. 40,421.50, even if the Impugned order is upheld. In the absence of any specific relief granted in the Impugned order, as contended by appellant, no demand and confirmation arises.
5. Now, considering the case of appellant in its reply to show cause notice, written submissions, appeal memorandum and he letter dated 01.02.1988 and 15.02.1988 of Range Superintendent and reply by appellant on 07.03.1988 and show cause notice dated 14.02.1989 and reply thereon, it is seen that appellant has not agreed to the observation of Superintendent’s letter 01.02.1988 that Modvat credit availed on inputs in the light of declarations filed is not proper and it was to be debited. For 15.02.1988 letter appellant’s reply is that Superintendent is not competent to demand, and proper procedure to be followed. In response to it Assistant Collector has issued show cause notice and demand, and called upon to show cause. Why wrongly availed credit should be recovered under Rule 57-I and Section 11A of Excise Act and why penalty should not be imposed under Rule 173Q. There is a gap of one year in between them. To justify the demand to gain limitation from 01.02.1988 and 15.02.1988, if the show cause notice was issued before 15.06.1988, then the discussion and finding in the impugned order, and contention of department could be upheld. In the absence of it letters dated 01.02.1988 and 15.02.1988 without any opportunity to the appellant, to put forth his case, but simply demanding the debit of credit taken, cannot save limitation in favour of department. So the entire claim is beyond 6 months from the last credit taken 24-12-1997. It cannot be maintained. The contention of the appellant is well found. It has to be and is accepted. Point raised is at (a) in para 3 of the order is answered in the affirmative.
6. In view of the above finding, the point raised whether the credit taken on inputs not approved by department is admissible, does not survive for consideration, apart from other contentions raised as to authorization issued to file appeal by Judicial Collector and maintainability of appeal in the absence of separate show cause notice, for demand recovery and its confirmation. But in the alternative it is also considered. As co:nsidered above, the review order and Impugned order does not challenge the 1st item reduction gear/spares warm gear and reduction of gear box. So the Impugned Order can retaliate to that item. In the absence of it,order-in-original has to stand in that regard under which demand is dropped and show cause notice is discharged. Impugned order has to be set aside in that regard.
7. Regarding the disputed item Jigger Spares, Spares for machine, Spares dreging range, Print washer actual in parts on credit availed, and Cloth guider/Frame detwister, appellant has clearly admitted the variation in description in declaration on the ground that these are different trade names for same items, and the approved declaration was filed in anticipated arrival of the same, whereas the revised declaration was filed after the receipt of the same, on the description of the supplier, but they fall under same chapter headings. Credit cannot be denied on a technical ground, as there is no dispute about the receipts of the inputs and its use in manufacture of final products. Order-in-original supports the contention of appellant, in the back of Trade notice and circulars. The Impugned order has observed in Page 2 that “Assistant Collector has not given any finding as to how cloth guider, declared as inputs was the same as inputs listed No. 2 in show cause notice. Respondent has failed to produce evidence to show that various inputs (Jigger spares etc.) was the same as cloth guider mentioned in declaration. Input in question for which recovery is sought for under show cause notice are not covered by Modvat declaration filed by Respondent. The Respondent is not entitled to avail Modvat credit on these inputs, and availment is wrong.”
8. In the approved declaration at Sr. No.27 Cloth guider/Frame Det-wister/spares is shown under chapter heading 84.51; as bought out item to be purchased to use in machinery. As per 25.01.88 revised declaration, for Cloth Guider/Frame Detwister/Spares item at Sr. No.27 is divided as 27A and 27B under chapter heading 84.51 – Spares CI and MS Rolls. S.S. Rolls, Shaft, S.S., M.S. Thaks, Hood, S.S. Cylinder, CI MS channel, S.S. M.S. Pin, CI and MS Walls, CI Nip, Hylam Bushes, Chain wheel, Worm wheel, Brake Drum, Padestal bracket and Float Dryer, Jigger Parts etc. As per show cause notice Modvat credit is availed on Jigger Spare, Spares for Jigger spares, Spares for Machine Spares, Range – Print Washer, Adj. Support with guider spare Rope twister, Adj. Support sooper spares, S.S. tanke, with common Chapter Heading of 84.51 for them and Cloth Guider/Frame detwister. So from this it is clear the inputs approved and used after taking Modvat credit falls under same chapter heading. The contention of department contrary to it cannot be upheld. Impugned Order does not say it. Similarity of goods is not established as per the said order. Revised declaration is accepted by department through AC on 20.07.1989 as per revised order; which is not correct as already narrated on the above para 8. Impugned order has correctly dealt with it. The impugned order cannot be upheld in which only Rule 57G is based, as mandatory requirement about declaration. The decision in 1997 (21) RLT – P679 in the case of Crown Die Casting Co. fully covers this case regarding tallying of heading and sub-heading of chapter with broad description of inputs also tallying. Trade Notice No. 222/88 of Commissioner of Central Excise and Customs, Ahmedabad issued on the basis of Govt. of India’s letter dated 05.09.1988, according to which Modvat cannot be denied because of one or more variation in the description of goods, which occurs because of facts that the products are known in the market by different names/brand names, provided the classification of inputs is correctly declared and duty on the inputs is paid under correct classification also supports the appellant’s case. The question of same inputs as per declaration and duty paying documents does not arise in view of the above material. Variation is admitted. Credit is permissible on the basis of common chapter heading, which is available in this case. The contention of the appellant is proper and correct and it is upheld. Point (b) is also answered in the affirmative. Hence the following order.
ORDER
For the reasons described above, show cause notice is barred by time. Modvat credit availed by appellant on the disputed inputs is permissible. Impugned order is set aside. Appeal is allowed with consequential relief, according to law.