ORDER
K.S. Venkataramani, Member (T)
1. This appeal is directed against the order dated 23-2-1988 passed by the Collector of Central Excise (Appeals), Madras by which he had upheld the order of the Assistant Collector of Central Excise, Rajajinagar Division, Bangalore, dated 17-8-1987 holding that the appellants herein were not entitled to MODVAT credit, for the period prior to 1.9-6-1987 on which date they filed declaration for availing of MODVAT credit. The appellants filed declaration for availing of MODVAT credit as required under Rule 57G of the Central Excise Rules with the jurisdictional Assistant Collector of Central Excise on 27-3-1986 and obtained acknowledgement on 2-4-1986. One of the inputs declared for MODVAT purpose was Lactose falling under Chapter XVII of the CET Act, 1985. However, in 1986 at the relevant time material eligible for MODVAT credit by Notification 177/86, dated 1-3-1986 did not include those goods falling under Chapter XVII of the CET Act, 1985. However, with effect from 1-3-1987 the coverage of MODVAT was widened by Notification 83/87 and in this goods falling under Chapter XVII were also included in the Notification as being eligible for MODVAT. The appellants took MODVAT credit on Lactose from March 87 onwards. They however, filed declaration under Rule 57G in respect of Lactose only on 19-6-1987. The Department held that the appellants were not eligible for MODVAT credit during the month of March and the Assistant Collector ordered reversing the credit in terms of Rule 571 of the Rules and this order was upheld in appeal.
2. Shri Mohan Parasaran, the learned Counsel appearing for the appellants submitted that the appellants herein had filed declaration in March 86 as required under Rule 57G and obtained a dated acknowledgement from the jurisdiclional Assistant Collector. It is not in dispute that the materials in question is an input for the purpose of MODVAT specified in the Notification, which is used in the manufacture of finished product, which is also eligible for MODVAT. The learned Counsel pointed out that even as early as March 86 they had given declaration under Rule 57G in which all the inputs they used have been declared, and because of this, when once the MODVAT Scheme was extended to cover the goods falling under Chapter XVII by the amending Notification on 1-3-1987 the appellants can, in their view, take MODVAT credit on Lactose also by virtue of the earlier declaration in which they had included the item as input. To deny the MODVAT credit for the period merely for want of a fresh declaration would be, in the appellants’ view, highly technical ground to deny to them the benefit for which they are otherwise eligible.
3. Shri K.M. Vadivelu, the learned D.R. appearing for the Department contended that declaration filed by the appellants in March 86 would be of no avail as at that time Lactose was not one of the items specified under Notification No. 177/86, and that the appellants ought to have filed fresh declaration in March 87 when the MODVAT Scheme was extended to cover the item. He further pointed out that the provisions of Rule 57G relating to declaration are very specific which lays down that only on and from the date of acknowledgement of their declaration, the manufacturer can avail of MODVAT credit on the inputs.
4. The submissions made by the learned Counsel and the learned D.R. have been carefully considered. Rule 57A relates to the applicability of MODVAT. This Rule lays down that the provisions relating to MODVAT shall apply to such finished excisable goods as the Central Government may by notification specify for the purpose of allowing credit of duty of excise or additional duty under Section 3 of Customs Tariff Act, 1975 as may be specified in the said notification paid on the goods used in or in relation to the manufacture of finished product and for utilizing credit so allowed towards payment of duty of excise leviable on the final products. Notification No. 177/86, dated 1-3-1986 accordingly was the Notification issued under Rule 57A which specified the inputs namely the goods excisable under various Headings of the Chapters in the Central Excise Tariff Act, 1985, as well as describing the finished products. It is an admitted position that in 1986 goods falling under Chapter XVII were not included in the Notification, although admittedly the finished products of the appellants were notified. Therefore, in 1986, the materials falling under Chapter XVII were not specified as input and they were therefore clearly outside purview of MODVAT Scheme. It was only in 1987 by virtue of Notification 83/87, dated 1-3-1987 materials like Lactose became eligible by being specified in the Notification as input for the purpose of MODVAT. At this stage we have to look into the provisions of Rule 57G. According to this Rule, a manufacturer intending to take MODVAT credit under Rule 57A shall file a declaration with the jurisdictional Assistant Collector giving the description of the input and the final product, and may take MODVAT credit on the input after obtaining acknowledgement of the declaration from the Assistant Collector. In the case of the appellants a declaration was made under Rule 57G in respect of Lactose only in June 87. Therefore, in terms of Rule 57G they are eligible to take credit only from the date of obtaining the acknowledgement of the declaration and not prior to that date. This is clearly the provisions of Rule 57G. The contention that since they had already included the material in their declaration filed in 1986, and that therefore, they were eligible to take credit without any further declaration in 1987, does not have much force. This is because as I have already seen, to be eligible for MODVAT the materials should be specified as input in the Notification under Rule 57A and this was not the case in respect of Lactose in 1986. Therefore in 1986 the question of filing a declaration under Rule 57G in respect of such material would not arise at all. When in 1987 the goods falling under Chapter XVII were covered by amendment Notification No. 83/87, it was for the first time that these became inputs specified in the Notification, and as such, declaration under Rule 57G will logically follow. Such declaration was given only in June 87, and therefore prior to that date, the appellants in terms of Rule 57G were clearly not eligible for taking MODVAT credit on the inputs in terms of Rule 57G. In such a view of the matter, there is no need to interfere with the order of the lower authority which is correct in law. The appeal is therefore rejected.
