1996(09)LCX0231

IN THE CEGAT, NORTHERN BENCH, NEW DELHI

Shri G.R. Sharma, Member (T)

A.R. INDUSTRIES

Versus

COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD

Order No. A/2269/96-NB, dated 18-9-1996 in Appeal No. E/843/96-NB

Cases Quoted

Atul Glass Industries Ltd. v. Collector — 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.) — Referred                   [Paras 4, 10]

Mubarakdin Bidi Factory v. Collector — 1986(11)LCX0027 Eq 1987 (027) ELT 0474 (Tribunal) — Referred                   [Para 5]

Advocated By : Shri Dhruv Agarwal, Advocate, for the Appellant.

 Shri Nanak Chand, JDR, for the Respondents.

[Order]. - By the captioned appeal the appellants have agitated two issues. The first issue is the denial of Modvat credit on certain goods as adhesive. The second issue is the demand of duty for which a credit was wrongly taken. Though the goods were received in the factory for repairs and were cleared finally after debiting duty in PLA.

2. The facts of the case are that the appellants are engaged in the manufacture of paper tubes. The appellants are availing the benefit of inputs duty under the Modvat scheme and filed a declaration on 31-3-1994 declaring adhesive against serial No. 3 classifiable under sub-heading 35.05. The department alleged that the appellants availed Modvat credit on Vimsol under sub-heading 3905.10 which was not mentioned in their declaration filed under Rule 57G and therefore issued a show cause notice to the appellants on 28-4-1994 asking them to explain as to why the Modvat credit amounting to Rs. 30,802/- for non-submission of declaration prior to 19-12-1994 and for not following the procedure for goods received back for repairs after clearance should not be denied to them.

3. The second issue pertains to goods received for repairs. In this case the appellants had received certain goods for repairs. The appellants had filed D-3 declaration but at the same time took credit of duty on the goods in their RG 23A Part II and availed this credit. The appellants at the time of clearance of the goods after repairs paid duty again and debited amount in their PLA. The department alleged that credit taken in RG 23A Part II was not permissible as it was not a question of inputs being received for the manufacture of final product. A show cause notice was issued to the appellants to explain as to why the credit taken in RG 23A Part II should not be recovered from them.

4. Shri Dhruv Agarwal, ld. Counsel appearing for the appellants submits that the appellants submitted declaration under Rule 57G on 31-3-1994; that the appellants declared the product as adhesive classifiable under sub-heading 35.05. He submits that Vimsol is a trade name and for their purpose was an adhesive. He submits that since declaration covered all types of adhesives they had correctly submitted declaration and had availed Modvat credit on the inputs used. The ld. Counsel submits that under 57G(5) there is a proviso to this Rule which stipulates that a declaration can be filed within six months from the date of receipt of the goods. He submits that there is a invoice No. 162, dated 4-10-1994 which is within six months and is covered by the requirement of Rule 57G (5). The ld. Advocate therefore submits that alternative plea was that in case the earlier declaration filed on 31-3-1994 is not taken as a declaration in respect of Vimsol then there case is fully covered by Rule 57G(5) in respect of invoice No. 162, dated 4-10-1994. The ld. Counsel cited and relied upon the judgment of Apex Court in the case of Atul Glass Industries Limited - 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.) for common parlance test holding that in case the goods are known by people who consume them or who deal in them by a particular name then that name is to be accepted for identifying that product. The ld. Advocate submits that product in dispute is known as adhesive by the people who deal in it and by the people who use it and therefore the declaration was correctly made and covered the brand name Vimsol also.

5. The ld. Counsel also agitated that there was denial of natural justice inasmuch as no opportunity of personal hearing was granted to them. He submits that the Tribunal in the case of Mubarakdin Bidi Factory - 1987 (027) ELT 474 held that there are two distinct opportunities required to be given to the appellants under Rule 233A and these two opportunities are the reply to a show cause notice and the representation by personal hearing. He submits that no opportunity of personal hearing was extended to the appellants and therefore there was denial of natural justice.

6. On the question of repairs the ld. Counsel submits that D-3 declaration as required under Rule 57G was submitted and that duty was paid on the repaired goods at the time of clearance by debiting in PLA; that asking the appellants to reverse the credit in RG 23A Part II which the appellants had inadvertently taken will amount to double payment of duty. The ld. Advocate submits that the appellants had taken credit of the duty paid on the goods received for repairs in RG 23A Part II and had availed credit for payment of duty on inputs cleared after that. He submits that at the time of clearance of repaired goods the duty was again paid by the appellants that demand of the department either of reversal of credit or disallowing the credit is not warranted as it will amount to payment of duty on the same goods twice. The ld. Counsel submits that the case was fully covered by the decision cited and relied upon and prays that the appeal may be allowed.

7. Shri Nanak Chand. ld. JDR submitted that adhesive is generic term and includes a number of products classifiable differently. He submitted that Vimsol is the product in dispute. The ld. JDR submitted that according to the duty paying documents Vimsol was classifiable under sub-heading 3905. 10. He submitted that the appellants had shown the classification sub-heading 35.05. The ld. JDR therefore submitted that all products falling under different chapter headings cannot be simply described by common name in so far as Central Excise classification etc. is concerned. He submits that the fact remains that neither in description column the product was described nor sub-heading was mentioned in respect of Vimsol. He submitted that Rule 57G is very specific in so far as furnishing description of the inputs and final product is concerned.

8. On the alternative plea of the appellants the ld. JDR submitted that only invoice No. 162, dated 4-10-1994 is covered by proviso to Rule 57G(5) and submitted that only this invoice may be covered in terms of the conditions of the Rule. He submitted that in respect of GP 1 No. 79 and invoice No. 40, dated 16-5-1994, the goods under this GP 1 and invoice were not received within six months from the date of filing revised declaration under Rule 57G.

9. On the question of disallowing the credit of duty on the goods received for repairs the ld. JDR submitted that no credit of duty paid on the goods can be taken in RG 23A Part II if the goods are received for repairs. He submitted that this position is very clear from the relevant rule and therefore the lower authorities have rightly asked the appellants to reverse the credit of duty taken in RG 23A Part II.

10. Heard the submissions of both sides. On careful consideration of the submissions I find that two short points arise in the appeal for determination. The first point is whether the declaration covered Vimsol. I find that for the purpose of declaration, Rule 57G is the relevant rule. Rule 57G stipulates that description of the inputs and the final product shall be furnished by the assessee. The contention of the appellants was that they had given correct description inasmuch as Vimsol for their purpose was an adhesive and was known in the market as also by the people who use it. In support of this contention the ld. Counsel cited and relied upon the judgment of the Apex Court in the case of Atul Glass Industries. As against this depatment’s contention is that Vimsol may be an adhesive but is different from other adhesives inasmuch as it was classifiable under sub-heading 3905.10 whereas other adhesives declared by the appellants were classifiable under 35.05. According to the department this separate classification clearly shows that adhesive is a generic term and includes different products.

11. On careful consideration of these contentions we observe that declaration describes only adhesive and sub-heading shown is 35.05. I also observe that the product in dispute is described as Vimsol (a brand name) but the classification of this product has been shown sub-heading 3905.10. Reading the requirement of Rule 57G carefully I find that description should be specific or tariff heading should have been the same. In the instant case the admitted position is that specific name of the product is Vimsol not descrided as such in the declaration and also classification of the product is not an adhesive under sub-heading 35.05 but under sub-heading 3905.10 Having regard to this discussion I hold that product in dispute was not declared and therefore Modvat credit will not be admissible on this product in the normal course. The learned Counsel took alternative plea stating that revised declaration under letter dated 16-12-1994 was furnished to the department which was acknowledged by the department and submitted that the inputs received under invoice No. 162, dated 4-10-1994 were clearly within a period of six months as envisaged in the proviso to Rule 57G(5) and therefore it was contended by him that on the inputs covered by this invoice the appellants were entitled to Modvat credit. Though this plea was opposed by the respondent however I find that there is force in this plea of the ld. Counsel. Accordingly I hold that Modvat credit to the extent of Rs. 6,000/- on invoice No. 162, dated 4-10-1994 shall be admissible to the appellants.

12. Another minor issue that was agitated in respect of this show cause notice was that the appellants were denied natural justice inasmuch as the opportunity of being heard was not given to the appellants. It was argued that this was mandatory requirement. I find that a show cause notice was issued to the appellants and in the show cause notice it was specifically set out that in case the appellants want to be heard they may say so. In reply to the show cause notice the appellants did not indicate anything nor did they specifically waive their mandatory right of personal hearing. I find that on perusal of the show cause notice it was specific in so far as personal hearing is concerned. I also observe that personal hearing was granted at the appellate stage though not at the lower authorities stage. Having regard to the facts and the circumstances of the present case I do not see that there was denial of natural justice.

13. On the question of reversal of credit of duty taken in RG 23A Part II I find from the contention of both sides that there was irregularity in so far as taking of credit is concerned. Admittedly the goods in the instant case were received back in the factory for repairs there was no question of taking any Modvat credit of duty on these goods. However from the record I find that the goods were cleared after debiting the amount in PLA. As duty on the goods was paid there was no question of disallowing credit of duty taken in RG 23A Part II or recovering that amount from the appellants. I order accordingly.

14. The impugned order its modified to the extent stated above and the appeal is disposed of accordingly.

15. Consequential relief, if any, shall be admissible to the appellants in accordance with law.

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Equivalent 1997 (93) ELT 495 (Tribunal)