Full Judgment
2. Shri Ashok Mehta, ld. Counsel for the appellants, submitted that the declaration filed by the appellants, herein, gives the particulars of the inputs although in the case of some of them like switches, they have not given specific description of the goods. However, the terms "switches", according to the ld. Counsel should be taken to cover also snap switches, which the department says is an item not included in the declaration. Similarly, they have also given general description of the input material with the corresponding tariff heading thereof. In such a situation, the ld. Counsel pleaded that the ratio of the Tribunal decision in the case of Collector of Central Excise v. Shri Ramakrishna Steel Industries reported in 1991 (56) E.L.T. 456 (Tri.) should be applied. In that decision, the Tribunal has noted the departmental instructions regarding the declaration so long as the description and sub-heading for the input as also final product is available in the declaration, the benefit of modvat credit can be allowed if it is established that the inputs received have been for the manufacture of the final product. In this case also, the ld. Counsel urged that the inputs are duty-paid and have been used in the maufacture of the final product.
3. Shri R.A. Sheikh, ld. D.R. pointed out that the description of the input generally and even by tariff heading, does not tally in respect [of] Body Time Delay relay base which is an electrical item under Chapter 85, but the appellants have declared this as cast zine article under Chapter 79. So also the ld. D.R. pointed out brass screws are falling under Chapter 74 and are different from screws of Chapter 73 as declared by the appellants. Apart from this, it is admitted position that inputs like aluminium anodised name plates, moulding powder and electrical contacts have not been declared at all even in general manner.
4. On a careful consideration of the submissions made by both the sides, it is clear that only those inputs which are included in the declaration under Rule 57G of the Central Excise Rules will be eligible for modvat credit. It is a necessary condition for the availment thereof. Therefore, straightaway, in respect of inputs like aluminium anodised, name plates, moulding powder, electrical contacts, these do not at all figure in the declaration by the appellants and as such the appellants have rightly been held to be ineligible to avail of modvat credit on these inputs. So far as item switches are concerned, the general description of the item as switches should be extended to cover snap switches and Tariff Heading 8536 of the C.E.T.A. 1985 is also broad enough. However, this principle cannot be extended in the case of brass screws which actually fall under Chapter 74 and these have to be declared specifically because screws otherwise fall under Chapter 73.
The declaration of relay base which falls under Chapter 85 Heading 8538.00 merely as cast aritcle of zinc under sub-heading 7907.90 does not really answer the purpose of declaration under Rule 57G. However, in this case also the benefit can be extended to the appellants because of the fact that it is seen from the Gate Pass under which these were received, description of the tariff heading is the same as has been declared by the appellants for these articles. This reasoning is also strengthened by the fact that the duty-paid nature of these inputs is not doubted and further the fact also remains that these materials have been used in relation to the manufacture of the final product. It is in this context, the S.R.B. decision cited by the ld. Counsel becomes relevant. The departmental instructions noted by the Tribunal therein were to the effect that if statutory records maintained by the asseesee shows that inputs have been received and used in the manufacture of the final product and declaration giving broad description chapters have been filed, the credit should not be disallowed. Therefore, in the present case, for the reasons aforesaid in respect of aluminium anodised name plate, moulding powder, electrical contacts and brass screws, the modvat credit cannot be extended to the appellants and it can be allowed for rest of the inputs which are in dispute in this appeal. Further, having regard to the nature of the offence, the penalty on them is not justified and it is set aside. The appeal is disposed of in the above terms.