ORDER
S. Kalyanam, Member (J)
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Trichy dated 22-3-1991, confirming the order of the Assistant Collector of Central Excise, Erode dated Nil and disallowing the credit taken and utilised by the appellant for the period 11-10-1989 to 2-11-1989.
2. Mrs. Komala Chowdhary, the learned Consultant for the appellant, submitted that the issue arises out of me Money Credit Scheme available under Rule 57K of the Central Excises and Salt Act, 1944 and the appellants are manufacturers of Vanaspathi and have been availing the Money Credit Scheme in terms of Rule 57K aforesaid read with Notification 27/87, dated 1-3-1987 and Notification 45/89, dated 11-10-1989, and the appellants had submitted a declaration in terms of Rule 57-O for availing the credit in terms of Notification 27/87 aforesaid and this Notification was subsequently withdrawn by Notification 39/[89], dated 25th August, 1989 and instead Notification 45/89, dated 11-10-1989 came to be issued. Proceedings were instituted against the appellants by issue of Show Cause Notice dated 26-2-1990 on the ground that the credit in a sum of Rs. 7,19,028.50 taken by the appellants under the aforesaid Money Credit Scheme was not permissible for the period 11-10-1989 to 27-11-1989 as the appellants had not filed the necessary declaration with the Assistant Collector of Central Excist in terms of the said Notification for the period in question indicating inter alia the description of the input and the finished product and obtained the dated acknowledgement for the same. The proceedings culminated in an order of adjudication at the hands of the learned Collector of Central Excise, Erode dated ‘Nil’ directing the appellants to expunge the credit availed between 11 -10-1989 to 27-11-1989, which order was confirmed by the Collector of Central Excise (Appeals) under the impugned order cited supra. Mrs. Komala Chowdhary, the learned Consultant for the appellants submitted that when there is no dispute with reference to the applicability of the Money Credit Scheme as such and when admittedly the appellants’ declaration filed earlier under the earlier Notification was in existence, the question of the appellants filing a fresh declaration when the earlier notifications were rescinded and fresh notification was introduced would not arise. A proper construction of Rule 57K and 57-O would show that a declaration, each time when a notification is issued is not called for and the very purpose of giving a declaration is only to enable the authorities to find out the eligibility of the appellants to Money Credit Scheme in respect of the input used in the manufacture of the end product and in the present case it is not the case of the Department that the notification would not cover the goods in question and as such the non-filing of a fresh declaration again even if the same is required to be filed, should be construed only to a procedural infraction not going to the root of the matter. The learned Consultant was at pains to submit that the Department is not disputing the identity of the input and their eligibility to Money Credit Scheme vis-a-vis the end-product and the use of the same by the appellants in terms of the Notification. This is precisely the purpose for which a declaration is called upon to be filed. The learned Consultant also placed reliance on the ratio of the ruling of the Gujarat High Court in the case of Dipak Vegetable Oil Industries Ltd. v. Union of India, reported in 1991 (52) E.L.T. 222, wherein the High Court has gone into the scheme of Money Credit and even allowed utilisation of the un-utilised credit even after the rescinding of the notification and after introduction of a new Notification. It was, therefore, submitted that if credit lying in books can have legal validity it would not be correct to hold that the earlier declaration filed would not hold good after the rescission of the earlier Notification and introduction of a new Notification. The learned Consultant also submitted that even as per the new Notification there was no change admittedly either in the description of the input or the final product and the manufacturing process also continued to be one and the same.
3. Heard Shri Subramanian, the learned D.R.
4. We have considered the submissions made before us. The short question that falls for our consideration is whether for the period in question, under the Money Credit Scheme referred to supra, the appellants would become disentitled to avail the credit on the only ground of non-filing of a fresh declaration after the new Notification came into force. It would be seen that under the Money Credit Scheme the appellants have been enjoying the credit in terms of Notification 27/87. It is also admitted by the Department that the appellants had initially filed a declaration in terms of the said Notification by clearly indicating therein the nature and use of the inputs and also the final product. The rescinding notification is similarly worded as the earlier Notification and the purpose of the Notification is to enable the eligible manufacturers to avail the Money Credit Scheme as per Rule 57K. Even if the appellants had not filed a fresh declaration after the introduction of the new Notification, inasmuch as the scheme was a continuing one and the wording of the Notification being similar to the earlier notification and the input and the output remaining the same, the technical fact of non-filing of a fresh declaration after the introduction of the new Notification should only be construed in the admitted facts and circumstances of this case, as a technical breach. In other words it cannot be disputed that the appellants had substantially complied with the terms of the Notification and the purpose for which a declaration is called upon to be given, all the relevant details which are necessary under the new Notification, admittedly find a place in the declaration given in terms of the earlier declaration given in terns of the Notification 27/87. In such a situation all that the appellants, to satisfy the technical requirement of law, should have done; were to take one more copy of the same declaration and filed the same with the Department. It is only in this context the purpose of filing a fresh declaration in terms of the Notification has to be taken note of. The declaration has to give certain factual particulars with reference to inputs and output only to enable the authorities to make the verification with reference to the party’s eligibility to the benefit of the Money Credit Scheme on the basis of the particulars in the declaration. When the factual position continues to remain the same merely on the ground that the appellants did not file one more copy of the declaration after the advent of the new Notification, to deny the credit would be totally contrary to the very spirit of the Notification. The declaration filed earlier by the appellants were very much available with the Department containing all the relevant particulars. Filing one more copy of the same after the introduction of the new Notification will be only a technical requirement. Therefore, when there is substantial compliance with the Notification, a procedural infraction should be treated as an irregularity which is curable. The Department, admittedly has not suffered or sustained any revenue loss nor the appellants have gained any undue advantage. Therefore, in our view the ratio of the ruling of the Gujarat High Court cited supra would have a bearing in constituting the nature and scope of the declaration to be filed in terms of the Notification. Therefore, in the facts and circumstances of this case, for the reasons stated above, we hold that the appellants would be entitled to the benefit of the Money Credit Scheme in terms of the notification in question and in this view the impugned order is set aside and the appeal is allowed.
Sd/-
(S. Kalyanam)
Member(J)
V.P. Gulati, Member (T)
5. I have given a careful thought to the order recorded by my learned Brother. I have not been able to persuade myself to agree with him that the appellants are entitled to the benefit of the Money Credit Scheme available in terms of Notification No. 45/89, dated 11-10-1989 in the absence of any declaration filed in terms of this Notification.
6. The short point that falls for consideration is whether a declaration which was filed by the appellants in the context of Notification 27/87, which was rescinded by Notification 39/[84], dated 25-8-1989 could be taken to be valid for the purpose of availing the benefit of the concession under the Notification 45/89, dated 11-10-1989. It is seen that the appellants had taken the Money Credit in a sum of Rs. 7,19,028.50 during the period 11-10-1987 to 27-11-1989 without filing the declaration as required in terms of Notification 45/89, dated 11-10-1989 read with Rule 57-O of Central Excise Rules. The plea of the appellants is that the declaration earlier filed for availing the benefit under Notification 27/87, which came to be rescinded on 25-8-1989, should be taken to suffice for the purpose of taking the credit under Notification 45/89, dated 11-10-1989. It has been pleaded that in terms of Rule 57K and 57-O no fresh declaration was called for, when once in the context of an earlier notification a declaration has been filed. For convenience of reference the said Rule 57K and 57-O are reproduced below :-
“Rule 57K. Applicability and extent of credit. – (1) The Central Government may, be notification in the Official Gazette, specify –
(a) the finished excisable goods (hereinafter referred to as “final products”) and the raw materials used in the manufacture of such final products (hereinafter referred to as “inputs”), to which alone the provisions of this section shall apply; and
(b) the rates at which the credit of money is to be given for use of such inputs in the manufacture of final products.
(2) When a notification has been so issued under sub-rule (1), credit at rates specified therein may be allowed for use of such inputs in the manufacture of such final products and the credits so allowed may be utilised for payment of duty on the final products, subject to the provisions in this Section and the conditions if any, stipulated in the said notification.”
“Rule 57-O. Procedure to be observed by the manufacturer. – (1) Every manufacturer intending to take credit under this section shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said Assistant Collector of Central Excise may require and obtain a dated acknowledgment of the said declaration.
(2) A manufacturer who has filed a declaration in sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of money on the inputs:
Provided that no credit shall be taken unless the inputs are manufactured in the factory of manufacture of the final product or are received in the factory under a proper invoice or despatch note indicating the name and address of the supplier of the inputs :
Provided further that the manufacturer shall ensure that the supplier is normally manufacturing or trading in such inputs and the name and address shown on the invoices are correct.
(3) A manufacturer of the final product shall maintain an account in Form RG 23B, Part I and II.
(4) A manufacturer of the final products shall submit a monthly return to the Superintendent of Central Excise indicating the particulars of the inputs used during the month and the amount of credit taken, along with extracts of Parts I and II of RG 23B.
(5) A manufacturer of final products shall, on demand by the proper officer, submit the invoices under which the inputs have been received.”
It has been further argued by the appellants that the Department has not disputed the identity of the inputs used and the appellants’ eligibility to the Money Credit Scheme in terms of Notification 45/89. It is observed that the procedure prescribed under Rule 57-O for availing of the Money credit is similar to the one prescribed under Rule 57G for availing of the MODVAT credit so far as the filing of the declaration and availing of the MODVAT Credit is concerned. It is a condition precedent in both the cases that the credit can be taken only after the declaration has been filed and acknowledgement in respect of the same is obtained from the jurisdictional Assistant Collector. In the context of MODVAT Scheme under Rule 57G, we have held in a number of cases and the position is now well settled that eligibility to MODVAT Credit only commences after a declaration has been filed and acknowledged by the jurisdictional Assistant Collector and it has been held in a number of decisions that the filing of a declaration is not merely a procedural requirement but a statutory requirement and unless the declaration has been filed no credit can be taken. This Bench of the Tribunal in t he context of Rule 57-O itself in the case of Tata Oil Mills Co. v. C.C.E., reported in 1990 (48) E.L.T. 279 (Tribunal), has held as under:
“… an assessee is put under a statutory obligation to file a declaration indicating to the Department the input intended to be used in the manufacture of the finished product and sub-rule (2) of Rule 57-O further makes it clear that a manufacturer, who has filed a declaration in terms of sub-rule (1) may after obtaining the acknowledgment aforesaid take credit of money on the inputs. A plain reading of the Rule would make it clear that filing a declaration is a condition precedent and it is only after filing a declaration and intimating the Department the input which the manufacturer intends to use, which would presumably be only prospectively and only after satisfying the Assistant Collector of Central Excise with reference to any information which he may require and obtaining the acknowledgement may take the credit of money on the inputs. We are, therefore, not inclined to accept the plea of the learned counsel in regard to the availment of credit on input viz. Cotton Seed Oil in the facts and circumstances of the case”.
The matter therefore, stands concluded by this judgment of the Tribunal. In the case above, the appellants had taken credit of duty under Notification issued under Rule 57K without filing a declaration as required under Rule 57-O. The Tribunal has clearly held that filing of a declaration is a condition precedent for availing of the MODVAT credit under Notification issued under Rule 57K. In the present case the earlier Notification 27/87 issued under Rule 57K came to be rescinded on 25-8-1989 and any declaration filed in the context of this notification ceased to have any legal force on that date. When another notification 45/89 came to be issued under Rule 57K on 11-10-1989, the appellants were required to comply with all the requirements of law for the purpose of availing of the benefit i.e., complying with the requirements as set out under Rule 57-O. The appellants admittedly did not file the declaration before they started taking credit in terms of Notification 45/89. As mentioned earlier, the declaration filed by the appellants in the context of Notification 27/87 could not be taken note of legally. As held by this Tribunal in the case referred to supra, filing of a declaration is a condition precedent before the benefit of the Notification issued under Rule 57K could be taken in terms of Notification 45/89. It may be mentioned that the purpose of filing a declaration is to make the departmental authorities aware of the appellants’ intention of availing of the concession/and to enable them to verify the appellants’ eligibility to the benefit of the Notification in question at the relevant time and ascertain any information from them which the Assistant Collector may require before acknowledging the declaration filed and thereafter to carry out spot checks if felt necessary regarding the use of the inputs in terms of the Notification from time to time. Unless the authorities are made aware in this regard no verification in regard to the satisfaction of the parameters which govern the concession under the Notification could be done from time to time while the goods are being manufactured. The appellants, therefore, not having carried out the mandatory requirement of filing a declaration were not eligible to the benefit of the credit as taken by them. I, therefore, hold that the order of the learned lower appellate authority is maintainable in law and the appeal is dismissed.
Sd/-
(V.P. Gulati)
Member(T)
POINT OF DIFFERENCE
Whether in the facts and circumstances of the case the non-filing of a fresh declaration in terms of Notification 45/89, dated 11-10-1989 for availing of the money credit for the period 11-10-1989 to 27-11-1989 has to be construed as a technical breach inasmuch as a declaration in terms of Notification 27/87, dated 1-3-1987 was filed and as the Money Credit Scheme was continued after sometime and the wording of the notification being similar to the earlier notification and it cannot be disputed that the appellants had substantially complied with the terms of the Notification and the purpose for which a declaration is called upon to be given and all the relevant details which are necessary under the new Notification find a place in the declaration given under Notification 27/87, the procedural infraction should be treated as an irregularity which is curable and therefore, the appellants would be entitled to the benefit of the Money Credit Scheme in terms of the Notification 45/89 and the impugned order has to be set aside and the appeal allowed, as held by Member (Judicial)
or
the filing of the declaration for availing of the benefit of Notification 45/89 dated 11-10-1989 is mandatory under Rule 57-O and is not a procedural requirement only and the issue stands concluded by the judgment of the Tribunal in the case of Tata Oil Mills Co. v. C.C.E., reported in 1990 (48) E.L.T. 279 and since the declaration filed earlier in terms of Notification 27/87, dated 1-3-1987 ceased to have any legal force with the rescinding of the Notification on 25-8-1989 and a fresh declaration was required to be filed statutorily on 11-10-1989, when the Notification 45/89 was issued, for taking credit from that date and in the scheme of things it was required to make the authorities aware of the intention of the assessees to avail of the concession and to enable the authorities to verify the assessee’s eligibility for the benefit of the Notification in question and ascertain any information from them which the Assistant Collector may require before acknowledging the declaration filed and thereafter to carry out spot checks, if felt necessary, regarding the use of the inputs in terms of the Notification from time to time, and, therefore, the lower appellate authority’s order is maintainable in law and the appeal has to be dismissed, as held by Member (Technical).
Sd- Sd/
(S. Kalyanam) (V.P. Gulati)
Member (J) Member (T)
T.P. Nambiar, Member (J)
7. The matter is referred to me for resolving the points of difference between learned Member (J), (Vice President) and learned Member (Technical). The points of difference referred to me are to the effect that :
Whether in the facts and circumstances of the case the non-filing of a fresh declaration in terms of Notification 45/89, dated 11-10-1989 for availing of the money credit for the period 11 -10-1989 to 27-11-1989 has to be construed as a technical breach inasmuch as a declaration in terms of Notification 27/87, dated 1-3-1987 was filed and as the Money Credit Scheme was continued after sometime and the wording of the notification being similar to the earlier notification and it cannot be disputed that the appellants had substantially complied with the terms of the Notification and the purpose for which a declaration is called upon to be given and all the relevant details which are necessary under the new Notification find a place in the declaration given under Notification 27/87, the procedural infraction should be treated as an irregularity which is curable and therefore, the appellants would be entitled to the benefit of the Money Credit Scheme in terms of the Notification 45/89 and the impugned order has to be set aside and the appeal allowed, as held by Member (Judicial).
or
the filing of the declaration for availing of the benefit of Notification 45/89, dated 11-10-1989 is mandatory under Rule 57-O and is not a procedural requirement only and the issue stands concluded by the judgment of the Tribunal in the case of Tata Oil Mills Co. v. C.C.E., reported in 1990 (48) E.L.T 279 and since the declaration filed earlier in terms of Notification 27/87, dated 1-3-1987 ceased to have any legal force with the rescinding of the Notification on 25-8-1989 and a fresh declaration was required to be filed statutorily on 11-10-1989, when the Notification 45/89 was issued, for taking credit from that date and in the scheme of things it was required to make the authorities aware of the intention of the assessees to avail of the concession and to enable the authorities to verify the assessee’s eligibility for the benefit of the Notification in question and ascertain any information from them which the Assistant Collector may require before acknowledging the declaration filed and thereafter to carry out spot checks, if felt necessary, regarding the use of the inputs in terms of the Notification from time to time, and therefore, the lower appellate authority’s order is maintainable in law and the appeal has to be dismissed, as held by Member (Technical).
8. Shri A. Vijayaraghavan, the learned Consultant appeared for the appellant and Shri Murugandi, the learned Consultant appeared for the respondent.
9. Shri A. Vijayaraghavan contended before me that there is no variation of inputs in the final product consequent on the issue of the Notification in this case. In that view of the matter it was submitted that the decision relied upon by the learned Member (Technical) in the case of Tata Oil Mills Co. v. Collector reported in 1990 (48) E.L.T. 279 is not applicable to the facts of this case. Shri Vijayaraghavan, the learned Consultant brought to my notice clarification issued by the Central Board of Excise & Customs vide their Circular No. 14/93-CX, dated 8-11-1993. He also contended that in the light of the above clarification issued by the Board, same procedure is being followed in other areas. In that view of the matter it was contended that the view taken by learned Member 0) (Vice President) may be agreed upon.
10. Shri Murugandi, the learned DR perused the departmental clarification issued by the Central Board of Excise and Customs and stated that the matter may be decided in accordance with law.
11. I have considered the submissions made by both the sides. Learned Member (T) has held that in the present case earlier Notification 27/87 issued under Rule 57 came to be rescinded from 5-8-1989 and later another Notification 45/89, dated 11-10-1989 was issued and therefore a fresh declaration is necessary as set out under Rule 57-O. Since the appellant did not file a second declaration with issue of the other Notification i.e. 45/89, the learned Member (T) was of the opinion that the purpose of filing the declaration is to make the departmental authorities aware of the appellant’s intention to avail of the concession and to enable the authorities to verify the appellant’s eligibility and since this was not done, he opined that the appellants are not entitled to the benefit of this Scheme. On the contrary learned Member (J) (Vice President) held that the deficiency is technical in nature since the appellants had already made a declaration under Notification 27/87, dated 1-3-1987 and the same will come to the aid of the appellants and that the first declaration will continue as a declaration even though the first Notification was rescinded. I have considered the views of both learned Vice President and learned Member (T). In the light of the arguments advanced by the learned Consultant for the appellants and the learned DR for the department, in order to appreciate the above contention I may reproduce the departmental clarification dated 8-11-1993 below :-
“Money credit declaration once submitted under Rule 57-O Continuation of validity irrespective of change in Notification.
In the Central Advisory Council Meeting held on 7th November, 1992, ASSOCHAM had raised a point relating to submission of declaration for availing money credit on the above subject and it was requested that with each change of Notification under Rule 57K a fresh declaration need not be insisted upon. It is reported that in some Collectorates, credit has been disallowed only for the reason that fresh declaration was not filed with the revised Notification.
2. Matter has been considered by the Board. It is observed that Rule 57-O provides for the filing of the declaration with the Assistant Collector indicating the description of the final products manufactured in the factory and the inputs intended to be used in each of such final product. So long the inputs remain the same and the final product is also the same it would not be necessary to file a fresh declaration. However, in case there is variation of the inputs or of the final product consequent to an issue of the Notification or otherwise, declaration is required to be filed.”
The Central Board of Excise and Customs is also of the view that so long as the inputs remain the same and also the finished product is also the same. It will not be necessary to file a fresh declaration in the such cases. The decision relied upon by learned Member (T) is not applicable to the facts of this case. In that particular decision, the facts were different as there was no declaration at all filed and the issue in that case was when there was no declaration at all as contemplated under Rule 57-O, the Tribunal held that, the appellant in that case was not entitled to the benefit of the Notification. In this case the appellants had made a declaration under the earlier Notification 27/87, dated 1-3-1987 and after the issue of another Notification 45/89, the appellants did not file a fresh declaration. In the facts and circumstances, it is now seen that there was no variation either in the inputs or in the final product and therefore, the appellants cannot be denied the benefit of Notification as the declaration filed by them in accordance with the first Notification is valid and it cannot be said that there was any violations of the rule and non-filing of a second declaration can be termed as a breach too technical in nature since there was no variation in the inputs or in the final product. Their first declaration can be taken to a valid declaration for the purpose of availing the benefit under the scheme and the appellatns are entitled to the money credit scheme as mentioned in the later Notification. In that view of the matter, I am of the view that the appellants are entitled to avail the benefit under the Notification. Hence I agree with the views of the learned Member (J) (Vice President) and the appeal is accordingly allowed.
12. The matter may be placed before the regular Bench for passing necessary order.
Sd/-
(T.P. Nambiar)
Member (J)
ORDER
In view of the majority decision, the appeal is allowed.