1996(02)LCX0042
IN THE CEGAT, EAST REGIONAL BENCH, CALCUTTA
Shri K. Sankararaman, Member (T)
EASTERN ABRASIVE LIMITED
Versus
COLLECTOR OF C.EX., CALCUTTA-I
Order Nos. A-82-83/CAL/96, dated 5-2-1996 in Appeal Nos. E-187/95 & E-188/95
Cases Quoted
Eagle Spring Industries v. Collector — 1990(11)LCX0050 Eq 1991 (053) ELT 0103 (Tribunal) [Paras 2, 4]
Indian Hume and Pipe Co. Ltd. v. Collector — 1995 (057) ECR 344 [Paras 3, 4]
Ajanta Steel Corporation v. Collector — 1994 (069) ELT A169 [Para 4]
Advocated By : Shri P.R. Ravi, Deputy General Manager (Accounts), for the Appellant.
Shri S.N. Ghosh, JDR, for the Respondent.
[Order]. - These two appeals have been filed against the common Order-in-Appeal bearing No. 35 and 37/Cal-I/95, dated 1-3-995 passed by the Collector of Central Excise (Appeals), Calcutta, rejecting two appeals filed before him against two Orders-in-Original passed by the Assistant Collector of Central Excise, Calcutta K-Division, disallowing the MODVAT credit, amounting to Rs. 38,308.24. The appeals were argued together by the respective sides and are disposed of by this common order.
2. Shri P.R. Ravi, Deputy General Manager (Accounts) of the appellants Company submits on their behalf that MODVAT credit has been claimed by them in respect of kraft paper required by them in the manufacture of their final product, coated Abrasives. They receive the input materials from different sources. The kraft paper that they require is of 120 GSM. They had declared the tariff classification of their inputs in question as 4804.19 which covers paper of a substance 65 gm per sq/m or more. They received most of their supplies of the required materials showing this tariff classification. But in the case of one supplier the tariff classification in the gate pass was 4804.29 but the weight of the paper expressed in terms of GSM was 120. Tariff classification 4804.29 does not cover kraft paper of substance more than 65 gm per sq/m and hence this classification shown by the said suppliers was obviously erroneous. The rate of duty under both the tariff sub-headings is, however, the same. They have furnished the description and tariff classification correctly. The error on the part of their suppliers in showing the tariff classification should not deprive them of the benefit of MODVAT which they are entitled to. In this connection, he relied upon the Tribunal decision in the case of Eagle Spring Industries v. Collector of Central Excise - 1991 (053) ELT 103.
3. The arguments were rebutted by Shri S.N. Ghosh, learned Departmental Representative. He stated that, apart from the variation in the tariff classification, the description of the two items under these sub-headings are also different and the products not the same. Explaining his point, Shri S.N. Ghosh stated that under sub-heading 4804.19 which was declared by the appellants, the goods would be kraft liner of substance 65 gm per sq/m or more. On the other hand, 4804.29 refers to other kraft paper that is, kraft paper other than what is classifiable under 4804.11 or 19 as the case may be. Thus the two headings cover distinctly different products. Declaring one item with the former classification will not enable the appellants to get the benefit if what they have received is another product with another classfication. He cited the Tribunal decision in Indian Hume and Pipe Co. Ltd. v. Collector of Central Excise, Bangalore - 1995 (057) ECR 344 where tariff classification 25.02 furnished by the appellants therein for the input material, cement was not considered specific enough. MODVAT credit was held to be not admissible to them. They had not filed variety wise declaration with the appropriate tariff sub-heading as they were bringing in Port Land Cement falling under 2502.20 and also Sulphate Resistant Cement falling under sub-heading 2502.90. Shri Ghosh, submitted that the department’s case in the present appeals are on stronger ground as the appellants had chosen to show tariff sub-heading which was not the same as that shown in the gate pass covering the goods in question. The difference in the tariff sub-heading would only mean that the goods covered under the particular gate pass did not conform to the classification declared by them and the argument taken by the learned Representative of the appellant that it was a case of erroneous classification on the part of officer-in-charge of the factory of the suppliers firm cannot be accepted. He pleaded that the appeals be accordingly dismissed.
4. The rival submissions have been duly taken note by me. Going by the South Regional Bench decision in the case of Indian Hume Pipe Co. Ltd., cited by Shri Ghosh, the impugned order would appear to be valid. But the present appeals require to be decided with reference to the facts involved herein. I have also to take note of the other Tribunal decisions one of which was cited before me by the learned Representative of the appellant Company. That was in Eagle Spring Industries v. Collector of Central Excise where the declaration under Rule 57G indicated Tariff Heading 7308.60 for the inputs “leaves for spring ” (Steel flats). As against this tariff heading in the declaration, the gate pass in respect of some of the consignments received by them indicated the tariff sub-heading 7209. 29. Objection was taken by the department, as noted by the Bench, despite the fact that the commodity was the same and the rate of duty under two sub-headings was also the same. The Tribunal also observed that the input suppliers are not under the control of the appellants and as long as appropriate description of the input materials have been correctly given in the declaration, MODVAT credit would be admissible. Applying the ratio of the above decision to the present case and taking into account the facts involved in the present appeals, I find that the tariff classification 4804.29 shown in the gate pass in question is inconsistent with the description of the goods, kraft paper GSM 120. This would support the plea taken on behalf of the appellant that there was an apparent error in the tariff classification at the hands of the officer-in-charge of the factory of the suppliers. Such an error, however, did not affect the assessment of duty as the rates of duty with under both the tariff sub-heading is reported to be the same. The present case is distinguishable from the Indian Hume Pipes Industries case relied upon by the learned Departmental Representative as in that case the inputs were two different products falling under two different tariff sub-headings. The case was decided against the appellant on the ground that the description of the inputs in the declaration was general and not specific. The particular variety of cement brought in as inputs was not declared. Also, only the tariff heading for cement was furnished but not the sub-headings applicable for both the varieties of cement. The Bench took note of the report in 1994 (069) ELT A169 about Supreme Court dismissing the Civil Appeal of Ajanta Steel Corporation against the Tribunal decision holding deemed MODVAT credit to be not admissible when the declaration was given broadly as Rolling/Rerolling/ Rerolled material in bills for market purchase of goods and that specific description would be necessary. That is no authority to deny MODVAT credit based on the difference between the Tariff sub-heading shown by them in the declaration and that shown in the Gate passes issued by a particular manufacturers/suppliers of the material, particularly, when the latter classification is found to be inconsistent and not applicable for Kraft paper of more than 65 GSM. That classification has to be held as wrong and no consequence by way of denial of MODVAT would arise. Going by the GSM criterion, the Kraft paper has to be taken as falling under Tariff sub-heading 4804.19 which was what was stated by the appellants in their declaration. I also take note of the clarification given by Shri Ravi in reply to the stand taken by Shri Ghosh regarding Kraft Paper and Kraft Liner Paper that they require only Kraft Paper and they had declared the same. Both the Tariff sub-headings in question cover Kraft Paper, the difference being only in grammage. No objection has been taken by the authorities below applying any difference between Kraft Paper and Kraft Liner Paper. The objection taken was only because of Tariff Sub-heading. This has been considered already and found to be not justified. In view of this position, the stand taken by the appellants is acceptable. I hold accordingly and allow both the appeals.
Equivalent 1996 (84) ELT 156 (Tribunal)