AADITHYA CHEMICALS PRIVATE LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants are manufacturers of sodium silicate, for which soda ash is an input. In December 1997 they took Modvat credit of Rs. 84,760 on soda ash which was not declared as input under Rule 57G of the Central Excise Rules, 1944. The relevant invoice did not contain certain particulars required under Rule 57G. On these grounds, the department proposed to disallow the credit under Rule 57(I). In their reply to the show -cause notice, the assessee submitted that they had filed a fresh declaration on 2.3.1998 declaring soda ash also under Rule 57G. The original authority, however, denied credit on soda ash to the assessee for want of declaration and also imposed a penalty of Rs. 5,000 on them. The appeal filed by the party against the order of the Assistant Commissioner was rejected by the Commissioner (Appeals). Hence the present appeal.

(2.) LD . Consultant submits that the credit in question was not liable to be denied to the appellants inasmuch as neither the duty -paid nature of the input nor its utilisation in the manufacture of sodium silicate was disputed. The credit was not to be disallowed on the minor procedural lapse of non -filing of declaration.

(3.) AFTER a careful examination of the records, I find that, in the relevant declaration filed with the Superintendent of Central Excise on 17.9.97, soda ash [SH2836.10] was not mentioned as raw material as found by the lower appellate authority after verification of records. In the copy of declaration [acknowledged by the Superintendent] retained by the assessee, the latter subsequently added 'soda ash' [SH2836.10] as 'raw material'. Obviously, this was done behind the back of the department. Hence the finding of fraud recorded by the Commissioner (Appeals) against the assessee cannot be faulted. The question which now arises is whether, on this finding, the Modvat credit in question should be denied to the assessee. I would answer this question rather in the negative inasmuch as it is, by now, settled law that Modvat/Cenvat credit is not liable to be denied on the ground of procedural lapses like non -filing/belated filing of Modvat declaration. This legal position has even been accepted by the Board in the Circular dated 23.2.1999 which clarified the amendments brought to Rule 57G under Notification No. 7/99 -CE(NT) dated 7.2.99. There is no dispute of the duty -paid character of the input in question, nor its utilisation in the manufacture of sodium silicate. In the circumstances, the assessee should be given the benefit of amended provisions of Rule 57G, held to have retrospective application, by the Tribunal's Larger Bench in the case of Kamakya Steels. It is pertinent to mention in this context that Kamakya Steels was a case of non -filing of declaration under Rule 57G and, even in that case, the benefit of the Board's Circular ibid was allowed to the party.