Judgment:
1. In the impugned order, the Commissioner held that "In view of above I hereby confirm the demand of Rs.10,26,160.75 wrongly availed as modvat credit under Rule 57I read with Proviso to Section 11A(1) of the Act. I also impose a penalty of Rs.11,00,000/- under Rule 173Q of the Rules." Being aggrived by this order, the appellants have filed the captioned appeal.
2. The facts of the case briefly stated are that the appellants are engaged in the manufacture of digital electronic exchange equipments.
They availed modvat credit on the inputs. The Central Excise authorities observed that the appellants had taken modvat credit on photo polymer films and alumina ceramic substrates imported by them on the items which were not declared by them.
3. Arguing the case for the appellants, Shri M.P. Devnath, ld. Advocate submits that insofar as photo polymer films are concerned the appellants had declared the items in the declaration as photo stencil films against serial No.27 of the Annexure to the declaration filed on 22.1.92. He submits that photo stencil films and photo polymer films fall under the same heading though the sub-headings are different. He submits that photo stencil films and photo polymer films are similar goods as the one declared in the declaration. He submits that Rule 57G has since been modified stating that the declaration does not need detailed description of the goods and that such declarations which do not contain the detailed particulars may also be accepted. He submits that this amendment has been made applicable to the pending cases of the Central Board of Excise and Customs. He submits that since in their case photo polymer films and photo stencil films are classifiable under tariff 37, therefore their declaration was complete and that they were entitled to the benefit of modvat credit.
4. In regard to alumina/ceramic substrates, ld. Counsel submits that in their declaration filed on 22.1.92, the alumina/ceramic substrates were declared. He, therefore submits that there was no mistake and that alumina ceramic substrates are covered by the same tariff item, therefore in terms of amended Rule 57G they were entitled to the benefit of modvat credit on this item.
5. Shri Mewa Singh, ld. SDR appearing for the Respondent Commissioner submits that the Rules are required to be stricly followed and since the items in question were not correctly described in the declaration filed under Rule 57G, the authorities below rightly rejected their claim. He reiterates the findings of the authorities below.
6. We have heard the rival submissions. We note that Rule 57GF has since been amended. The CBEC under its Circular No.441/7/99-CX dt.
23.2.99 in para 3 clarified that "It should hereafter be ensured that show cause notices are not issued for procedural lapses as mentioned in the Notification without making proper enquiries. Wherever the Assistant Commissioner, after making enquiry due, is satisfied that the Modvat credit taken by the assessee is incorrect, adjudication proceedings in the normal course should be initiated." This circular in para 1 clarifies that "It is directed to refer to Notification No.7/99-CE (NT) dated 9.2.99 issued to amend Modvat Rules. The aforesaid notification has been issued to insert sub-rule (11) in Rule 57G and sub-rule (13) in Rule 57T of the Central Excise Rules, 1944 so as to empower the Assistant Commissioner of Central Excise having jurisdiction over the factory of the manufacturer to allow credit of duty paid on inputs/capital goods ignoring minor procedural lapses in the declaration or in the invoice/document based on which credit is to be taken. However, the Assistant Commissioner should ensure that inputs/capital goods have suffered duty and are being used/are to be used in the process of manufacture. The Assistant Commissioner is also required to record the reasons in file for allowing Modvat credit in each case." 7. We further note that there is allegation of suppression of material facts and wrongly availing modvat credit. In the instant case, we note that the SCN was issued on the basis of entries made in RG 23A Part II and receipt of the bill of entry submitted alongwith monthly RT 12 returns. We note that this is settled position now that where the statutory documents are relied on in the SCN longer period is not invokable. This fact is supported by the decisions of this Tribunal in the case of Kriloskar Oil Engine Limited [1993 (65) ELT 371], in the case of BHEL [1987 (18) RLT 573] and in the case of M/s. Tony Electronics Limited [Final Order No.1198/97 dt. 23.12.97].
8. A small credit of duty of Rs.31,285/- was disallowed on the ground that the goods were short received and not used. We note that the appellants have already debited Rs.11,503/- in RG 23A Part II. The remaining amount which was accounted for by the appellants is admissible to the appellants. Thus, both on merits as well as on limitation, the demand is not sustainable in law. Accordingly, the impugned order is set aside and the appeal is allowed.