1996(02)LCX0144
IN THE CEGAT, NORTH REGIONAL BENCH, NEW DELHI
Shri S.L. Peeran, Member (J)
GAUTAM CABLE INDUSTRIES
Versus
COLLECTOR OF CENTRAL EXCISE, NEW DELHI
Order No. A/450-451/96-NB, dated 14-2-1996 in Appeal No. E/860 & 864/94-NB
Cases Quoted
Collector v. Ramakrishna Steel Ind. — 1990(12)LCX0058 Eq 1991 (056) ELT 0456 (Tribunal) [Paras 2, 5]
Rajasthan Transformers & Switch Gears v. Collector — 1995 (059) ECR 128 [Paras 2, 5]
Apex Steels (P) Ltd. v. Collector — 1995(03)LCX0086 Eq 1995 (080) ELT 0368 (Tribunal) [Para 5]
Chamundi Steels Rerolling Mills v. Collector — 1994(03)LCX0007 Eq 1996 (081) ELT 0563 (Tribunal) [Para 5]
Geeta Steel Rolling Mills v. Collector — 1994(05)LCX0020 Eq 1994 (073) ELT 0055 (Tribunal) [Para 5]
Advocated By : Shri A.N. Sharma, Advocate, for the Appellant.
Shri P. Dass, SDR, for the Respondents.
[Order]. - In both these appeals common question of facts and law arises. Hence they are taken up together for disposal as per law.
2. The appellants are manufacturers of insulated wires and cables falling under Heading 8544.00. For the purpose of manufacturing of this final goods they utilised inputs which had been described in the declaration filed under Rule 57G of Central Excise Rules, 1944 as “wire of non-alloy steel” as against the utilisation of inputs which is said to be wire of non-alloy steel coated with zinc. Both the inputs fall under the same Tariff Heading 7217.90 and both the inputs are specified for utilisation of MODVAT Credit. The appellants contended that they were utilising the MODVAT Credit in respect of this product for a long time and the GP 1 had clearly indicated the product as “wire of non-alloy steel coated with zinc” and the same had been accepted by the department time and again. However, on an audit inspection two demands were raised by show cause notice dated 13-8-1993 for the period February to April, 1993 and as a consequence of this, demands of duty has been confirmed by the lower authorities by two orders-in-original. Both the orders were disposed of by a common order of the Collector. The Learned Collector has negatived the contention of the appellants that although the declaration is broad based in terms of Tariff description and that there is no distinction in the Tariff between wire coated zinc or not, the description in the declaration under Rule 57G is a mere technical variation and this technical variation should not come in the way of granting the benefit. The learned Collector has also not accepted the Trade Notice No. 134/88-C.E., dated 20th September, 1988 issued by Bombay Collectorate as well as the ratio of the judgment cited by the assessee as rendered in the case of Collector of Central Excise v. Ramakrishna Steel Ind. as reported in 1991 (056) ELT 456 as well as in the case of Rajasthan Transformers & Switch Gears v. Collector of Central Excise, as reported in 1995 (059) ECR 128. The Learned Collector has held that although the product wire non-alloy coated or not coated would fall under the same sub-heading 7217.90 but however, the rates of duty for both the items are different in terms of Notification No. 44/33 and as such the products being different in trade the declaration not [tallying] the benefit of MODVAT has been rightly denied.
3. Arguing for the assessees the Learned Advocate submitted that so long as the description given in the declaration tallies with the Tariff description and there is no variance in the rate of duty on the inputs and the same having been accepted by the department all along and even for subsequent period then in that case such a variance in the description in the gate pass is a minor and technical breach, which is required to be ignored in terms of the judgments and the trade notice cited by him. He also submitted that the inputs wire of non-alloy steel coated with zinc is also a specified input for availing MODVAT Credit and the department had been scrutinising the gate passes and accepting the same. As otherwise also they are entitled for the benefit. He pointed out that the appellants were under the bona fide belief that they should give a broad description of the item in the declaration in terms of the law stated in the Tribunal’s judgments and trade notice. If the department had some doubt they could have got the declaration amended by directing them. As the same has not been done therefore, they cannot be burdened with duty by denying the benefit.
4. The Learned DR submitted that they are two different products and they cannot be considered as one and the same, as the rate of duty for coated and non-coated zinc wire is different. He submitted that the inputs utilised were not as per the declaration and hence there is a clear violation of the Rules. Besides denial of MODVAT, the appellants can even be penalised. He submitted that the appellants cannot take the plea of estoppel. He submitted that it is only on verification of records, the department can observe the violation to issue the demands and therefore, the contention that the department has been accepting the GPs is not an acceptable proposition.
5. I have carefully considered the submissions made by both the sides and have perused the records. It is not disputed before me that the department had been accepting the declaration of the product in the gate passes and that the department was aware of the minor discrepancy. It is true that the declaration filed by the appellants did not specify the words “coated with zinc”. Is this discrepancy of such a grave nature to deny them the MODVAT Credit? In my opinion, the MODVAT Credit can be denied only if the appellants had utilised the inputs which are not specified in the concerned Notification and also in cases where they show in the declaration one type of input, which is entitled for MODVAT but instead utilise any other non-specified input. In this particular case, wires non-coated or coated with zinc, both are specified inputs. The classification of both the items are under the same Tariff sub-heading. There is no allegation that they have improperly taken credit in this case. The Tribunal had examined a similar issue in the case of Ramakrishna Steel Industries (supra) wherein the description given in the declaration was Molybdenum. They were utilising Molybdenum scrap as an input and claiming the benefit. The Tribunal held that they were entitled to avail the benefit in view of the fact that both the inputs fall under the same chapter heading. The Tribunal has also relied on the Board’s clarification in their letter dated F. No. 263/17/87-CX., dated 9-2-1988. It has been noted that the rate of duty in respect of molybdenum and molybdenum scrap is not the same. The differing rate of duty cannot be the ground to deny the benefit and objection raised by the lower authorities on this ground is answered by this Judgment. Again the Tribunal in the case of Rajasthan Transformers & Switch Gears (supra) held that the procedural lapses should not come in the way of substantive statutory rights and that MODVAT benefit cannot be denied even if there are certain differences in the declaration. The Tribunal has noted the judgment of different High Courts. While holding this view the position has also been clarified in the trade notice 24/88-C.E., dated 26-2-1988. Although the goods in this case may be different inasmuch as, being coated and uncoated with zinc but both the items fall under the same sub-heading and both are specified inputs for grant of MODVAT Credit. The position would have been different if the input wires coated with zinc were not specified inputs, then in that event there would have been misdeclaration or misutilisation of MODVAT Credit and the department would have been justified in raising the demands. In a similar situation, the parties had cleared the goods without Central Excise licence and paying excise duty on a bona fide belief that the goods were exempted. The department had raised demands. The parties had contended that they were entitled for MODVAT Credit. The department had taken objection that the parties had not filed the declaration and hence no MODVAT Credit can be granted to them. The Tribunal went into this question in great detail and after noting the High Court’s judgment held that so long as the benefit is available to them the same cannot be denied to the assessees as in the case of Apex Steels (P) Ltd. v. Collector of Central Excise, as reported in 1995 (080) ELT 368 and also in the case of Chamundi Steels Rerolling Mills v. Collector of Central Excise, as reported in 1994(03)LCX0007 Eq 1996 (081) ELT 0563 (Tribunal) = 1994 (003) RLT 855. This view was subsequently followed in the case of Geeta Steel Rolling Mills v. Collector of Central Excise, as reported in 1994 (073) ELT 55. In Geeta Steel Rolling Mills, it has been held that non-filing of MODVAT declaration on the ground of noneligibility to Notification No. 202/88 should not deprive the assessee of the benefit of MODVAT Credit.
6. In view of the discussion and conclusion arrived at by me in the light of judgments of the Tribunal, I am inclined to set aside the impugned orders and allow the appeals.
_______
Equivalent 1996 (83) ELT 605 (Tribunal)