KAMAKHYA STEELS (P) LTD Vs. CCE

JUDGEMENT

(1.) "Whether an assessee can avail modvat credit in respect of inputs (Sponge Iron) without filing a declaration" is the issue to be considered by the Larger Bench.

(2.) THE appellants are manufacturers of Iron and Steel Products, (M.S. Ingots). Sponge Iron is one of their inputs. They had filed a modvat declaration indicating various inputs and final outputs but had not included Sponge Iron in their initial declaration because at that time Sponge Iron was exempt from duty and therefore no modvat credit could be claimed. However, with effect from 1.3.92, it became dutiable and, therefore, in respect of the quantities received under valid duty paying documents, they took the modvat credit and availed it for the purpose of paying duty on the declared outputs. However, they inadvertently omitted to file a supplementary declaration amending the one initially filed, to include this item. As soon as this omission was pointed out by the Supdt., they filed a supplementary declaration including Sponge Iron explicitly therein. However, the demands in these two appeals are in relation to periods prior to the date of revised declaration and related to the period when Sponge Iron had not been included in the declaration. It was the plea of the party before the authorities below that there was only a procedural lapse on the part of the assessee in not including the item specifically and since the modvat had been taken with reference to duty paid goods received and utilised in the manufacture of declared output and, therefore, there was substantive compliance with the modvat provisions, the demands should not have been raised and they should not have been penalised. It was also submitted that in the classification list filed by them they had mentioned that they would be availing modvat benefit and alongwith the RT -12 returns also, they had enclosed the list showing the inputs received from manufacturers of Sponge Iron. In other words, the Department was fully aware that they were availing the benefit of modvat on respect of Sponge Iron. The pleas were not accepted and having become unsuccessful before the authorities below, these two appeals were filed.

(3.) THE Hon'ble Vice President who heard the matter referred the issue to the Larger Bench to resolve it observing that there are apparently two schools of thought within the Tribunal - -one, represented by the cases cited by the learned Counsel which have taken into account the attendant circumstances and considered such omissions on the merits of the individual case and held that modvat credit was not deniable wherever they were satisfied about the bona fides and substantive compliance with the requirements of the modvat procedure and the second, represented by the case cited by the learned DR in which the declaration has been held to be a substantive requirement and not a procedural or technical one and was considered as not condonable even in the circumstances mentioned therein.