ORDER
K.C. Mamgain, Member (T)
1. Three show cause notices were issued to the appellants on the ground that they have availed modvat credit on certain inputs without filing declaration under Rule 57G of the Central Excise Rules, 1944. After considering the defence of the appellants, the original authority came to the conclusion that in respect of 7 inputs heading/sub-heading numbers under which the inputs have been received were at variation with those declared in the declaration. Three inputs namely HDPE drums, 6 Amino Penicillanic Acid and DMAC were declared on 21.10.98 i.e. much after taking of the credit and, he accordingly, disallowed the credit of Rs. 6,69,025.66 and imposed penalty of Rs. 25,000/- on the appellants. The Commissioner (appeals) upheld the order of the original authority.
2. It was pleaded for the appellants that they had filed declaration for the disputed products before taking the modvat credit. The description of the product which was received by them from the supplier of the inputs tallied with the declaration filed by them. Even the Chapter headings also tally but the difference is only in respect of sub-headings. Credit should not be denied to the appellants on the ground that sub-headings under which the inputs supplier has classified the goods are different from the sub-headings for which they have filed declaration. In respect of three items namely DMAC, 6 Amino Penicillanic Acid and HDPE drums declaration was filed on 21.12.98. After taking credit, they have applied for condonation of delay to the Assistant Commissioner under their letter dated 21.3.1999. However, no reply was given to them. They relied on the decision of this Tribunal in the following cases-
(1) J.B.M. Tools Ltd. v. CCE, Pune 2002(144) ELT-561, where it was held that modvat credit not to be denied when declaration not filed in view of Sub-clause (ii) of Sub-rule (13) of the erstwhile Rule 57T.
(2) Veejay Lakshmi Engg. Works Ltd. v. CCE, Coonoor 2005 (187) ELT-354, where it was held that provisions of Rule 57G of erstwhile Central Excise Rules, 1944 as amended by Notification No. 7/99-C.E. (NT.) dated 9.2.1999 applicable to pending Modvat cases relating to any period prior to 9.2.1999.
(3) L.M.L. Ltd. v. CCE, Kanpur 2002 (147) E.L.T. 269, where it was held that declaration of inputs given by the appellants in the modvat declaration has also not been contested by the authorities below. The only ground on which the modvat credits taken on the two inputs have been denied to the assessee is that the Chapter Headings stated in the declaration for the inputs were different from those which had been mentioned for the goods by the manufacturers thereof in their invoices. The denial of the credit on the said ground cannot be sustained in view of the decision of this Tribunal’s Larger Bench in Kamakhya Steels Pvt. Ltd. v. CCE, Meerut 2000 (12) E.L.T. 247.
(4) Kamakhya Steels Pvt. Ltd. v. CCE, Meerut 2000 (121) ELT-247 (Tri.-LB)
Several other cases were also referred on the issue….
3. On behalf of the Revenue, it was argued that they are not disputing in allowing the modvat credit in respect of the goods where description of the goods tally with the modvat declaration and the invoices, but there is only a difference in the subheading numbers of the classification done by the inputs suppliers and the classification shown in the declaration. In the case of two inputs, there is a difference in the Chapter number under which inputs supplier has classified the products and the declaration made by the inputs receiver i.e. appellants. These inputs are Pencillin G. Amidare Biocatalyst and Methylone Chloride. It was also argued that declaration filed by the appellants; on 21.12.98 was additional declaration and this will be applicable for the inputs which were received after that date. Therefore, the credit taken on the three inputs namely, DMAC, 6 Amino Penicillanic Acid and HDPE drums can only be available to the appellants after the date of filing of the declaration and not prior to that. Their application dated 21.3.1999 said to be for condonation of delay in filing the declaration was considered by the adjudicating authority in para 4.10 of his order and he has given the findings that application for condonation of delay was filed three months after filing declaration. A bare reading of which indicates that the declaration dated 21.12.98 has been filed as a supplementary declaration submitted in respect of additional inputs likely to be received and does not make any mention of the fact that these inputs have already been received and credit taken thereon. He, therefore, did not consider their letter dated 21.3.99 for condonation. It was, therefore, pleaded that the order of the lower authority is sustainable. Reliance was also placed on the decision of the Tribunal in the case of Paro Food Products v. Collector of Central Excise, reported in 1988 (38) ELT-332 where it was held that in interpreting the scope and ambit of Rule 57G(2), the Tribunal in a number of decisions has already taken the view that a manufacturer who has not filed a declaration under Rule 57G, will not be entitled to take credit of duty paid on the inputs received by him under the Modvat Scheme
4. I have considered the submissions made by both sides. There is no dispute about the fact that the appellants have filed declaration in respect of most of the inputs being used by them and the declaration dated 21.12.1998 filed by them is supplementary declaration as their forwarding letter to that declaration is to the effect that “we are likely to receive more inputs and intends to take credit on the same. Accordingly, we are hereby filing supplementary declaration for additional inputs only.” Therefore, it is clear that declaration dated 21.12.1998 can be taken as declaration filed for the inputs received by them from that date onwards and it is not applicable for the credit taken before filing such supplementary declaration. Therefore, credit of Rs. 30,074.38 on DMAC, 6 Amino Penicillanic Acid and HDPE drums is not allowable to the appellants for the period prior to the declaration. The application for condonation of delay was filed by them much after the issue of show cause notice. Therefore, the lower authorities have correctly rejected the same and the provisions of amended Rule 57G under notification No. 7/99 will not be applicable in such a situation.
5. As regards the disallowance of the credit on other inputs which were received by them from inputs supplier under different sub-heading numbers than sub-heading numbers declared by them in their declaration, I find that description of the goods is not different as shown by the inputs supplier or as shown in their declaration. In these circumstances, the credit cannot be denied to them merely on the ground that subheading numbers shown by the inputs suppliers are different. The sub-heading numbers of classification of inputs given by the inputs supplier according to the understanding of the supplier, whereas the sub-headings declared by the inputs receiver are according to his understanding. As long as description of the goods remains the same, credit needs not be denied to the appellants on the ground that sub-heading numbers shown in the invoices by the inputs suppliers are different from the sub-heading numbers shown in their declaration. I also find that in the case of Methylone Chloride, the invoice has not mentioned any sub-heading number but description is the same. Therefore, on this item also, the credit cannot be denied. In respect of Pencillin G. Amidare Biocatalyst, the description given by the appellants in their declaration and of the supplier of the inputs is the same but chapter heading in the declaration is shown as 2941.00 whereas in the invoice it is shown it as 3507.00. This may be a classifiable dispute but as far as the input receiver is concerned, he has declared the goods correctly in this declaration. Therefore, credit cannot be denied to them on the ground that the same goods were differently classified by the inputs supplier. Therefore, barring the denial of credit of Rs. 30,074.38, the denial of credit on other inputs cannot be sustained. Accordingly, the penalty imposed on the appellants is reduced to Rs. 2,000/-.
6. The appeal is partly allowed with consequential relief to the appellants.
(Dictated and pronounced in open court).