ORDER
P.G. Chacko, Member (J)
1. The brief facts of the case are as follows:
2. The appellants are manufacturers of Malleable Cast Iron (MCI) Inserts and other cast articles falling under Chapter 73 of the Schedule to the Central Excise Tariff Act and are availing the facility of Modvat credit on inputs under Rule 57A of the Central Excise Rules. They procure iron scrap from outside, melt the same and manufacture MCI inserts using moulds. The product is supplied to manufacturers of concrete (railway) sleepers, who use them as inputs for their products. The appellants had taken Modvat credit to the extent of Rs. 3,98,160.49 on inputs used for manufacture of MCI Inserts; during the period February to May, 1997, after filing a declaration under Rule 57G of the Central Excise Rules. The jurisdictional Assistant Commissioner of Central Excise disallowed the Modvat credit so taken under Rule 57A, on the ground that, in the declaration filed by the party under Rule 57G, the final product namely ‘MCI Inserts’ had not been declared and that such non-declaration of the final product was not condonable. The adjudicating authority also imposed a penalty of Rs. 25,000.00 on the party for alleged contravention of Modvat rules.
3. During the period September to December, 1997, the appellants had taken Modvat credit to the extent of Rs. 6,22,839.00 on the inputs used for the manufacture of MCI Inserts, under Rule 57A ibid. This time, the credit was taken after having declared the goods under Rule 57T of the Central Excise Rules. The declaration under Rule 57T had been filed on 15-5-1997 showing, inter alia, MCI Inserts as final products. The Assistant Commissioner disallowed this credit as well, on the ground that there was no declaration under Rule 57G for availment of inputs credit. The adjudicating authority also imposed a penalty of Rs. 50,000.00 for alleged contravention of rules.
4. Aggrieved by the above orders of adjudication, the party preferred appeals to the Commissioner (Appeals), who disposed of the appeals by a common order upholding the lower authority’s order of disallowance of Modvat credit but reducing the total penalty of Rs. 75,000.00 to Rs. 50,000.00 having regard to the facts and circumstances of the case. The present appeals are against the above order of ld. Commissioner (Appeals).
5. I have carefully perused the impugned order and connected records of the case. I have, particularly, examined the copies of the Modvat declarations in question. I have also heard ld. Sr. Advocate Shri M. Chandrasekharan for the appellants and ld. JDR Shri Y.R. Kilania for the respondents.
6. Ld. Sr. Advocate has, after reiterating the grounds of the appeals, cited a plethora of decisions of this Tribunal on issues identical with the ones involved in these appeals. With reference to appeal No. E/1388/2000, ld. Counsel has made particular mention of the decision of the Tribunal in the case of Hindustan Gas and Industries Ltd. v. CCE, Vadodara [1996 (88) E.L.T. 413 (T)]. In that case, a 2-Member Bench was dealing with the classification dispute relating to ‘MCI Inserts’ used as raw material for the manufacture of concrete sleepers. The Bench, after considering the various processes to which the Inserts were subjected, held that the said goods were not covered by any of the specified materials named under heading No. 73.02 but were classifiable under heading No. 73.07 of the Tariff. Ld. Sr. Advocate has drawn my attention to the description of goods under heading No. 73.07 as extracted in the order of the Bench in Hindustan Gas and Industries Ltd. (Supra). The description reads as under :-
“Castings of iron or steel, not elsewhere specified in this Chapter or in Chapter 72.”
Ld. Counsel has drawn my attention to the above decision in his effort to explain the background in which the final product happened to be described in the declaration filed under Rule 57G. On a perusal of the declaration itself, I note that the final products were described as “Cast articles of iron and steel”. There is no dispute of the fact that the said final products are covered by Chapter 73 of the Tariff. The Rule 57G declaration has shown the goods under various sub-headings of Chapter 73. In this connection, ld. Counsel has relied on a few decisions of this Tribunal to substantiate his point that minor variations in sub-heading are immaterial when the goods fall under an undisputed Chapter heading. Ld. Advocate has, in this behalf, cited the decisions in the following cases :
(i) Kelvinator of India ltd. v. CCE [1996 (85) E.L.T. 175].
(ii) CCE v. Lakshmi Steel Rolling Mills [1997 (93) E.L.T. 274].
(iii) Orient Steel Industries v. CCE [1999 (107) E.L.T. 728].
(iv) Eicher Motors v. CC [1997 (95) E.L.T. 433].
As rightly submitted by ld. Advocate, there is no dispute of the fact that the inputs in question were duty-paid and were received and utilised by the appellants in the manufacture of MCI Inserts in their factory. The only question is whether the Modvat credit amounting to Rs. 3,98,160.49 taken on the inputs could have been denied on the sole ground that the final products were not described specifically as ‘MCI Inserts’ in the Rule 57G declaration. This issue is one which stands squarely covered in favour of the assessees by numerous decisions of this Tribunal. Neither of the lower authorities has recorded any finding to the effect that the inputs in question were not used for manufacture of MCI Inserts. This being the position with regard to the identity of the final product, in my view, an unnecessary controversy appears to have been raised by the lower authorities by maintaining that a declaration without specifically naming the final products as ‘MCI Inserts’, but describing the same as ‘Cast articles of iron and steel’ under Chapter heading 73 of the Tariff would not be sufficient declaration under Rule 57G for the purpose of availment of Modvat credit on the inputs. It is pertinent to note that there is no controversy over the description of the inputs in the declaration filed by the party. The substantive right of the appellants to take Modvat credit on the inputs cannot be defeated on such minor technical grounds. It would be too parochial a view to say that the declaration filed by the party was inadmissible for the Modvat credit on account of the non- mention of final products as ‘MCI Inserts’. The decision of the lower authorities disallowing the Modvat credit on the ground of non-description of final products in the declaration requires to be set aside. The case law cited by ld. Sr. Advocate is quite apposite to the point at hand and requires to be followed.
7. The question whether inputs credit could have been denied on the ground that the declaration had been filed under Rule 57T instead of Rule 57G now arises for consideration in Appeal No. E/1389/2000. Arguing for the appellants on this issue, ld. Sr. Counsel has placed reliance on the decision of this Tribunal (2-Member Bench) in the case of Kalyani Steels v. CCE [1998 (99) E.L.T. 620]. In that case, the appellants had filed a declaration under Rule 57T and such declaration contained all information required to be furnished under Rule 57G in relation to the goods on which credit was to be taken. The Tribunal held that Modvat credit on the goods as inputs was admissible under Rule 57A notwithstanding the failure to file declaration under Rule 57G. The Tribunal has held to the same effect in numerous subsequent cases too. There being no dispute on the sufficiency or otherwise of the particulars stated in the Rule 57T declaration, I am inclined to follow Kalyani Steel (Supra) and hold that the Modvat credit taken cannot be denied to the party on the ground of the declaration having been filed under Rule 57T instead of Rule 57G. The decision of the lower authorities on the issue is, therefore, bad in law and the same is liable to be set aside.
8. Ld. DR, who has reiterated the findings of the lower authorities, has not cited any better authority to dislodge the appellants’ case in these appeals.
9. On the question of penalty, I observe that, the Modvat credits having been held to be admissible on merits, there can hardly be any case of contravention of Modvat rules and, therefore, the penalty imposed by the lower authorities cannot be sustained.
10. In the light of the above observations and findings, I set aside the impugned orders and allow these appeals, with consequential reliefs, if any.