ORDER
R. Jayaraman, Member (T)
1. This is an appeal against the Order-in-Original No. 17/90, dated 30-3-1990 of the Additional Collector of Central Excise, Nagpur.
2. The appellants, who are engaged in the manufacture of steel castings filed a declaration, after the introduction of Modvat Scheme indicating the description as Ferro Silicon manganese. However, they had received the input silicon manganese and taken Modvat Credit. Hence the department alleged that the input brought in is not covered by the Modvat declaration filed by them on 12-3-1986. They were issued a show cause notice dated 24-1-1990 for recovery of credit taken during the period October 1986 to November 1986. There are two grounds pleaded in the appeal. One is on merits pleading that silicon manganese is also classifiable under same Chapter Heading 7202.20 and it is necessary for making the final product and this input is also eligible for Modvat credit. Hence specifically non-mentioning silicon manganese should not come in the way of getting the substantive benefit. The other ground relates to time bar of the demand. It was pleaded that the gate passes was submitted to the department alongwith the RT-12 returns. No objection was taken against the declaration in not covering this input. Hence they cannot invoke the extended period, had they pointed out in time, they would have filed the declaration covering silicon manganese.
3. After hearing both the sides, I find that though technically the objection thar silicon manganese is not covered by the description ferro silicon and ferro manganese is sustainable, I have to take note of the fact that this declaration is their first declaration after the introduction of the Modvat Scheme and the provisions of Modvat Scheme were not clear. Moreover at the time of giving declaration, precise description of the product brought in may not be known to them. Hence if they have not declared silicon manganese in their declaration, objection should have been taken at the time of assessment of RT-12 returns, when the Deptt. had seen the gate passes with such description. Hence I am of the view that merely because the item is not declared, it would amount to suppression, especially when two items of ferro alloys declared are classified under the same Tariff Heading and inputs silicon manganese is also an eligible input. Non-declaration is only on account of either the ignorance or on account of the Modvat scheme being new to them. Moreover, failure to declare this input cannot amount to suppression with an intention to evade duty, because if they had declared it, they would have got the benefit in any case, because the item is eligible for Modvat credit. Hence the extended period cannot be invoked. The demand is therefore not sustainable on the ground of time bar.
4. Since no mala fide motive can be attributed, their non-declaration of the silicon manganese, which is an eligible input under modvat scheme, penalty is also not justified. I therefore allow the appeal.