Oswal Agro Mills Ltd. vs Collector Of C. Ex. on 14 March, 1997

Customs, Excise and Gold Tribunal – Delhi
Oswal Agro Mills Ltd. vs Collector Of C. Ex. on 14 March, 1997
Equivalent citations: 1997 (93) ELT 211 Tri Del


ORDER

S.S. Kang, Member (J)

1. The appellant M/s. Oswal Agro Mills Ltd. filed this appeal against the Order-in-Appeal No. 319/CE/CHD/92 passed by the Collector of Central Excise (Appeals).

2. The appellants are engaged in the manufacture of soap falling under sub-heading 3401.01 of the Schedule to Central Excise Tariff Act, 1985. The appellants were availing the facility of Modvat credit of excise duty in respect of various inputs used in or in relation to manufacture of their final product. The appellants during the period from November, 1990 to March, 1991 took Modvat credit in respect of Hydrochloric acid and Sulphuric acid and also took Modvat credit of Rs. 2,20,500/- in respect of the inputs lying in stock at the time of filing of declaration under Rule 57G of the Central Excise Rules, 1944. The Assistant Collector of Central Excise confirmed the demand. The appellant filed the appeal and the appeal was dismissed on the ground that Hydrochloric acid and Sulphuric acid are used for purification of glycerine which was a by-product and cannot be considered as an input used in or in relation to manufacture of final product and Modvat credit of Rs. 2,20,500/- was held to be inadmissible under Rule 57G of the Central Excise Rules, 1944.

3. The ld. counsel appearing on behalf of the appellant submitted that the Modvat credit on Hydrochloric acid and sulphuric acid was denied wrongly on the ground that the same are used for refining glycerine, a by-product emerging at intermediate stage during the manufacture of soap. She further submitted that the glycerine is used in the manufacture of soap. The use of the glycerine in the manufacture of soap is not disputed by the Revenue. Therefore, she submitted that the appellants are entitled for Modvat credit in respect of Hydrochloric acid.

4. In respect of denial of Modvat credit of Rs. 2,20,500/-, she submitted that the appellants took Modvat credit after filing the declaration on 26-2-1991. She further submitted that the respondents has not considered the case of the appellant under the provisions of Rule 57H of the Central Excise Rules, 1944 and she submitted that Modvat credit under transitional provisions cannot be denied. She relied upon the decision of the Hon’ble High Court of -4 Madhya Pradesh in the case of Gilt Pack Ltd. v. Assistant Commissioner of Central Excise reported in 1994 (69) E.L.T. 222. She further prayed that the appeal be allowed.

5. Shri Jangir Singh, ld. JDR on behalf of the respondent reiterated the findings of the lower authorities.

6. Heard both sides. In this case the benefit of Modvat credit in respect of the inputs Hydrochloric acid and sulphuric acid was denied on the ground that these inputs are used for the purification of glycerine which was a byproduct. The contention of the appellant is that glycerine so purified is used in the manufacture of soap and this fact was not disputed by the respondents. Therefore when the inputs are used for purification of the by-product i.e. glycerine and the glycerine is used in the manufacture of final product i.e. soap, the benefit of Modvat credit in respect of these inputs connot be denied. Therefore, we hold that appellants are entitled for the benefit of Modvat credit in respect of hydrochloric acid and sulphuric acid used in purification of glycerine to the extent, the glycerine is used in the manufacture of final product i.e. soap.

7. The appellants filed the declaration under Rule 57G of the Central Excise Rules, 1944 on 26-2-1991. After filing the declaration, the appellants took Modvat credit on the inputs received on 16-2-1991. Rule 57H of the Central Excise Rules, 1944 provides that Assistant Collector of Central Excise may allow the credit on duty paid on the inputs received by the manufacturer immediately before obtaining the dated acknowledgement of declaration if he is satisfied that such inputs are lying in stock or are received in the factory after filing the declaration. The respondents has not considered the case of the appellant under the provisions of Rule 57H of the Central Excise Rules, 1944. It is a settled law that substantive benefit cannot be denied on the procedural lapse. In the present case, the declaration under Rule 57G of the Central Excise Rules, 1944 was filed on 26-2-1991 whereas the inputs in question were received on 16-2-1991 and it is not a case of the respondents that the goods are not available for verification at the time of filing of declaration. In view of these circumstances, we remand the matter back to the jurisdictional adjudication Assistant Commissioner for de novo adjudication. The jurisdictional Assistant Collector will decide the matter after granting an opportunity of personal hearing to the appellants. The appeal is allowed by way of remand.

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