Judgment:
1. The appeal is by Collector of Central Excise, New Delhi challenging the order in appeal passed by Collector of Central Excise (Appeals), New Delhi by which the latter had rejected an appeal filed before him by the department against the order in original passed by Additional Collector of Central Excise, Gurgaon. By the said order in original, the Additional Collector had dropped the adjudication proceedings initiated against the present respondent vide show cause notice dated 28-6-1993 for recovery of an amount of Rs. 1,77,419/- and imposition of penalty. The Additional Collector accepted their plea that Modvat credit should not be denied to them in respect of their input, copper wire scrap as they had obtained the permission of the Assistant Collector for clearing copper waste and scrap under Rule 57F(2) for manufacture of copper tubes and pipes. It was held by the Additional Collector that such permission would amount to an acknowledgment of their using the particular input and constitute substantial compliance of the provisions of Rule 57G of Central Excise Rules, 1944 regarding declaration of inputs and final products. Modvat credit was accordingly held to be admissible to them in respect of copper wire scrap. This decision, on challenge by the department, was upheld by the Collector (Appeals), leading to the present appeal.
2. Shri J.S. Agarwal, learned Counsel for the appellant opposed the grounds taken in the appeal and contended that the authorities below had decided the matter correctly and pleaded that the department's appeal be dismissed. In reply Shri Y.R. Kilania, learned DR submitted that without declaring copper wire scrap as input, Modvat credit could not have been taken by the appellant. He pleaded that the order be set aside and the appeal be allowed.
3. I have considered the submissions. I have gone through the record including the cross-objection filed by the respondent opposing the appeal and a list of Tribunal decisions in support of the plea that non-declaration of the input in question should not be the reason for disallowing Modvat credit. The Tribunal decision in 1990 (46) E.L.T.392 (Tribunal) has been cited for the proposition that broad description is sufficient. For their plea that credit is admissible even if the inputs are received prior to filing of declaration, reliance has been placed on the decisions reported in 1991 (55) E.L.T.128 (Tribunal) and 1992 (62) E.L.T. 561. That non declaration is only a procedural-failure is pleaded on the strength of the decisions in 1994 (2) RLT 185 and 1995 (8) RLT 868 (Tribunal). On delayed filing of the declaration and for the plea that the declaration may be filed within six months, the following cases have been cited :- The decisions cited do not actually support the plea taken by the respondent that notwithstanding the non-inclusion of the subject input, namely copper wire scrap in the declaration filed by them under Rule 57G showing the inputs and the final products, they were eligible to take the credit for such inputs. The decisions are in the context of adequacy of general description of the inputs, discrepancies in the Tariff Headings/Sub-headings and non-applicability of the extended period of limitation in such cases of inadequate declaration. In the present case the declaration filed under Rule 57G did not include copper wire scrap. This is the admitted position. In the cross-objection filed against the appeal, while stating that the non-filing of the requisite declaration was only an act of inadvertent omission of procedural nature which was also rectified later on, it has been pleaded that permission was taken from the Assistant Collector for job work procedure under Rule 57F and thus they had complied with Rule 57G in a substantial way. This plea was taken by them before the Additional Collector also and was accepted by her. She held that the permission granted by the Assistant Collector for movement of the scrap to the job worker's premises for processing there and return of the processed intermediate product to the respondent would amount to an acknowledgment of the fact of their using the particular input and would amount to substantial compliance of the provisions of Rule 57G.The contrary ground taken in the appeal is that the fact that application had been made under Rule 57F(3) did not absolve them of the need to give a declaration of inputs under Rule 57G. The requirement under Rule 57G(1) is that every manufacturer intending to take credit of the duty paid on the inputs shall file a declaration indicating the description of the final products and the inputs intended to be used in each of such final products and obtain a dated acknowledgment. As already considered earlier, it is the admitted position that such a declaration was not filed in respect of the subject input. The decisions cited on behalf of the respondent did not deal with situations where an input was not included in the declaration.
Discrepancies in the Tariff Heading or a general description have been held to be not a disqualification for availing Modvat credit. The question here is, however, not of incomplete or general description but of non-declaration of the subject input. Such a failure viewed in the context of Rule 57G(1) clearly goes against the respondent. Declaration of input is a mandatory requirement. If, however, the inputs had been received before filing of the declaration, the matter will have to be regulated in terms of Rule 57H. This requires the satisfaction of the Assistant Collector about the availability of the inputs at the time of filing the declaration either as such or as the final product in the manufacture of which it had been used. Relaxation in the matter of filing the declaration within a period of six months from the date of the duty paying document was not applicable at the material time as it was a subsequent development. In the circumstances, the impugned order in appeal has to be set aside. I order accordingly and allow the appeal and hold that Modvat credit in respect of the inputs not included in the declaration but availed by the respondent is ordered to be recovered from them except for the amount of credit already reversed by them in the RG 23A Part II account while clearing part of the inputs itself under Rule 57F(2) as in force at the material time.
Cross objection only seeks upholding of the impugned order and is dismissed as appeal is allowed.