Full Judgment
1. The facts of the case in brief are that the appellant company manufactures Plate and Bar Working Machinery namely Guillotine Shears, Press Brakes etc., and has filed declaration under Rule 57G, dated 15-5-1986 for availing modvat credit against various inputs, among which hydraulic powerpack is listed in page 1, classificable under Chapter heading 8466.00 which is acknowledged by the Assistant Collector Central Excise Division II, on 19-5-1986. The appellant received the above input from Virat Engg. P. Ltd., Bombay under Central Excise G.P. 1 Sr. No. 32 and 33, dated 1-9-1989 with Central Excise duty amounting to Rs. 8,845.24 and Rs. 9,607.50 respectively, under the Chapter Heading 8479.00. The Superintendent Central Excise Thane, Division II, Range VII issued a show cause notice on 29-3-1990 alleging that the input received is under different chapter than the one declared by the appellant and the modvat credit in that regard is not admissible. The appellant was called upon to show cause why it should not be recovered under Rule 57-1, which has been wrongly used towards the payment of Central Excise duty on finished goods/bought out items cleared in September 1989 resulting in to the loss of revenue to Government of India. The appellant replied it on 2-5-1990. After the personal hearing, and examining the material available on record under the order-in-original the demand was confirmed by the Assistant Collector. The appeal preferred against it was rejected, holding that the material actually received is not the same as shown in the declaration, and both the description under tariff classification should tally to avail the modvat credit. Hence this appeal.
2. In support of the appeal, the Commercial Manager Shri D.P. Kulkarni of the appellant has submitted that the declaration of the appellant with respect to the description and tariff of the input under Rule 57G of the Central Excise Rules was accepted by the department without any objection. The description of the goods in the gate passes and the declaration are the same. The denial of Modvat credit on the ground of different tariff is not justifiable when the description of the goods and the rate of duty tally. The finding that the product is different is not correct. The tariff mentioned in the gate pass by the supplier is not sufficient to deny the Modvat credit. When the declaration is accepted and acted upon, and the supplier from Belgaum has shown in the gate pass, the same tariff as mentioned by the appellant in the declaration. The ld. JDR has submitted that the Chapter Heading should also tally, apart from other description in the declaration, gate pass.
The reasoning in the impugned order is proper and correct.
2. The point for consideration is whether there are sufficient grounds to set aside the impugned order? My finding thereon is in the affirmative.
3. Perused the show cause notice dated 29-3-1990 and annexure "A" thereto, and the reply of the appellant with the enclosed statement in reply to the annexure "A", and the declaration dated 15-5-1996 under Rule 57A to avail the credit of duty paid inputs, and the reply dated 19-5-1986 of the Assistant Collector Central Excise Thane, under which it is written "you are entitled for the credit of only from 15-5-1986" on the declaration under Rule 57G(I) of the Central Excise Rules 15-5-1986 of the appellant. Also perused the gate passes of Virat Engg.
(P) Ltd. Bombay in favour of the appellant and the literature of the final product of the appellant, and the gate pass No. 38, dated 14-4-1989 of Standard Hydraulic (I) Pvt. Ltd. Belgaum. The reply of the Assistant Collector to the appellants declaration supports the appellant that the declaration of the input under column No. 3 and 4 namely Tariff heading and description of the inputs and column Nos. 3 & 4 are accepted by the Department and the appellant was permitted to avail credit on the input hydraulic powerpack under chapter heading 8466.00. The gate pass No. 38, dated 19-4-1989 of the Standard Hydraulic Inds. Pvt. Ltd. is with respect to the same input under the same chapter heading 8466.00 as declared by the applellant. The description of the goods in the disputed gate pass as hydraulic power pack tallies with the declaration of the appellant under Rule 57G. The Tariff Headings 8479.00, 8413.00, 8418.80 are shown in these gate passes by Virat Engg. Pvt. Ltd. Bombay. This is the sole basis on which the modvat credit is denied to the appellant. As contended by the appellant when the Chapter heading given by the appellant in the declaration is accepted by the department, without changing the same in accordance with law, the Modvat credit cannot be denied. The appeal memorandum and the grounds of appeal at Items 12.2,12.7 gives the complete picture of all the tariff heading involved in this case. The Tariff heading given by Virat Engg. is blindly accepted by the lower authorities without examining in detail whether it is correct or not.
The appellant has given a complete picture of Chapter Heading 8479.00 dealing with the machine and mechanical appliances having individual functions, not specified or included elsewhere in this chapter and has utilised the input has not coming within that perview. According to the appellant it is assembled with the differential product: viz.
Guillotine shear/Press brake for operating the Swing beam/top slide and ascertained that it is necessarily classifiable under Chapter 8466.00 being the part suitable for used with machine of Heading 84.56 to 84.65 finished product of the appellant, which fall under Chapter Heading 84.62. The appellant has fulfilled all the requirements for getting the Modvat credit namely the description of the input, and its relation with the finished product, the rate of duty and duty paid document under Rules 57A and G of the Central Excise Rules. He has also urged that there is no specific heading in the Tariff 84 of elswhere. He has also dealt with the Chapter Headings 8479.00, 8413.00 and 8418.80 mentioned by Virat Engg. Pvt. Ltd. which deals with pump items and Valves. In view of this clear picture given by the appellant which is not rebutted by the department, and since the department has not objected to the appellant availing the Modvat credit on the declaration filed by it till the issue of show cause notice on the basis of gate passes of Virat Engg. Pvt. Ltd. The denial of modvat credit without exhaustively, considering the material available on record is not proper and correct. So under these circumstances the contention of the appellant gains weight and it is entitled to succeed. The point raised is answered in the affirmative. Hence I pass the following order.
For the reasons discussed above, the appeal is allowed with consequential relief according to law and the orders of the lower authorities are set aside.