Rohan Coach Builders Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. this appeal arises from order-in-appeal dated 12-1-1997, confirming the denial of modvat credit amounting to rs. 19,000/- and also confirming the penalty of rs. 2,500/-. the allegation against the appellants are that they had utilised the inputs for manufacturing motor vehicle falling under chapter heading 8703.00 in respect of which they had not filed declaration required under rule 57g of central excise rules. it is contended by the appellants that they had filed classification list under rule 173b and had also declared in the registration certification and in all the final invoices had also been shown the tariff heading. it is also a manufactured public passenger motor vehicle (body building). they had filed declaration and in the declaration in column 2 pertaining to classification sub-heading, they had shown 8702 and given all the details of the inputs in the column '"description of input". it is their contention that the same inputs were utilised for manufacture of public passenger motor vehicle which fall under chapter heading 8702 or 8703. it is due to inadvertent lapse that they have not included the chapter heading 8703 in the declaration filed on 9-5-1994. they had subsequently declared again given the sub-heading 8703 vide declaration dated 21-4-1995. it was also thereafter that the department issued show cause notice on 9-6-1995 on the ground that they are not entitled for benefit of modvat credit in respect of input utilised in the manufacture of motor vehicle falling under heading 8703. it was contended that there was also a procedural lapse and such a lapse benefit of modvat credit cannot be granted. the lower authorities have rejected their plea and have held that since they have not filed a proper declaration, therefore, they were not entitled for benefit of modvat credit and it does not come within the ambit of mere procedural lapse and therefore they are liable to be penalised by imposing penalty.2. arguing for the appellants, the learned advocate submits that the description of the final product input and components in the declaration is the same for all type of manufacture under chapter heading 8702 or 8703. it is due to inadvertent mistake that they had missed to put the chapter heading 8702 and 8403. it is submitted that there is no cross utilisation of inputs, as this is the same input which goes into the manufacture of vehicle. they had filed classification list under rule 173q and other documents reflected under chapter heading 8703. it is their contention that such type of procedural lapse have been condoned by the tribunal as can be seen in number of cases as cited in khosla cast steel & alloys pvt. ltd. v.collector of central excise, as reported in 1989 (44) e.l.t. 691, kelvinator of india ltd. v. collector of central excise, as reported in 1996 (85) e.l.t. 175, chamundi steel re-rolling mills v. collector of central excise,roche products ltd. v. collector of central excise, 127. it is therefore, his submission that due to this inadvertent lapse of not putting the chapter heading 8703 in the initial declaration they cannot be denied the benefit of modvat credit nor penalty can be imposed.3. the learned dr submits that this is not a case of procedural lapse but a substantial lapse inasmuch as they have taken modvat credit without filing declaration. as it is a deliberate attempt of taking modvat credit without declaration, therefore, penalty is leviable. he reiterates the findings given by both the authorities.4. on a careful consideration, i find force in the appellants' submission. it is noticed from the declaration and other relevant documents that the input utilised for all types of manufacture of public passenger motor vehicle (body building) is the same. there is no dispute raised by the department about the cross utilisation of the inputs or misuse of the inputs for manufacturing the final product. in the initial declaration filed on 4-3-1994, they have not indicated classification under 8703, while they had indicated 8702. it is the departments' case that only if they had declared heading 8703, only then they become eligible for the modvat credit. i notice that the appellants have declared the inputs under heading 8703 in the declaration filed under 173b. it is further to be noticed that the appellants themselves filed a declaration at a later date, and the show cause notice was issued thereafter. therefore, the plea that there is only a procedural lapse is required to be accepted. the tribunal in the case of indag rubber limited v. collector of central excise, as reported in 1997 (93) e.l.t. 572 after noting earlier judgment had held that description given in the declaration is a broad description and the items can be clubbed in the broad description given in the declaration. it has held that the items were broadly described in the declaration filed before the department. it has held that admitted position is that the credit of duty was taken on the strength of duty paying documents; that there is no dispute that the goods were not received or were not used in the manufacture of final product.therefore, the tribunal further observed that since the credit of duty has been taken on the strength of gp 1s/bills of entry and therefore, there cannot be any dispute about nonavailability of these documents.the tribunal has held that having regard to these facts that the goods were broadly described in the declaration filed and in fact receipt of the goods in their factory and utilisation of the inputs in the manufacture of final product is not in dispute therefore, their case is fully covered by clarification given by the central board of excise and customs dated 9-8-1988.1 notice that this judgment is totally applicable to the facts of the present case.5. i notice that a similar view has been expressed by the tribunal in the case of khosla cast steel & alloys pvt. ltd. as cited by the learned counsel. a similar view has also been expressed by the tribunal in the case of kelvinator of india ltd., wherein the tribunal has noted that the cr sheets and cr sheets in coiled form both are classifiable under chapter 72 and are thus declared inputs. the tribunal held that minor variation in sub-heading number is not relevant when the goods fall under the same chapter heading specified in the notification. the tribunal taken into consideration the earlier judgment rendered in the case of chamundi steel re-rolling mills. in view of the tribunal's ruling on this point and the facts in question being similar inasmuch as that the appellants are manufacturer of motor vehicles and they had declared the goods under heading 8703 in other registers and classification list and also there is no dispute on inputs and final products discharging duty and all the products - have same rate of duty, therefore, on peculier facts of this particular case the plea of the appellants is required to be accepted in terms of the ratio of the cited judgment. there is no cause for imposing penalty, therefore, the impugned order is set aside and appeal allowed.

Judgment:
1. This appeal arises from Order-in-Appeal dated 12-1-1997, confirming the denial of Modvat credit amounting to Rs. 19,000/- and also confirming the penalty of Rs. 2,500/-. The allegation against the appellants are that they had utilised the inputs for manufacturing Motor Vehicle falling under Chapter Heading 8703.00 in respect of which they had not filed declaration required under Rule 57G of Central Excise Rules. It is contended by the appellants that they had filed classification list under Rule 173B and had also declared in the registration certification and in all the final invoices had also been shown the Tariff heading. It is also a manufactured Public Passenger Motor Vehicle (Body Building). They had filed declaration and in the declaration in Column 2 pertaining to classification sub-heading, they had shown 8702 and given all the details of the inputs in the column '"Description of input". It is their contention that the same inputs were utilised for manufacture of Public Passenger Motor Vehicle which fall under Chapter Heading 8702 or 8703. It is due to inadvertent lapse that they have not included the Chapter Heading 8703 in the declaration filed on 9-5-1994. They had subsequently declared again given the sub-heading 8703 vide declaration dated 21-4-1995. It was also thereafter that the department issued show cause notice on 9-6-1995 on the ground that they are not entitled for benefit of Modvat credit in respect of input utilised in the manufacture of motor vehicle falling under Heading 8703. It was contended that there was also a procedural lapse and such a lapse benefit of Modvat credit cannot be granted. The lower authorities have rejected their plea and have held that since they have not filed a proper declaration, therefore, they were not entitled for benefit of Modvat credit and it does not come within the ambit of mere procedural lapse and therefore they are liable to be penalised by imposing penalty.

2. Arguing for the appellants, the learned Advocate submits that the description of the final product input and components in the declaration is the same for all type of manufacture under Chapter Heading 8702 or 8703. It is due to inadvertent mistake that they had missed to put the Chapter Heading 8702 and 8403. It is submitted that there is no cross utilisation of inputs, as this is the same input which goes into the manufacture of vehicle. They had filed classification list under Rule 173Q and other documents reflected under Chapter Heading 8703. It is their contention that such type of procedural lapse have been condoned by the Tribunal as can be seen in number of cases as cited in Khosla Cast Steel & Alloys Pvt. Ltd. v.Collector of Central Excise, as reported in 1989 (44) E.L.T. 691, Kelvinator of India Ltd. v. Collector of Central Excise, as reported in 1996 (85) E.L.T. 175, Chamundi Steel Re-rolling Mills v. Collector of Central Excise,Roche Products Ltd. v. Collector of Central Excise, 127. It is therefore, his submission that due to this inadvertent lapse of not putting the Chapter heading 8703 in the initial declaration they cannot be denied the benefit of Modvat credit nor penalty can be imposed.

3. The learned DR submits that this is not a case of procedural lapse but a substantial lapse inasmuch as they have taken Modvat credit without filing declaration. As it is a deliberate attempt of taking Modvat credit without declaration, therefore, penalty is leviable. He reiterates the findings given by both the authorities.

4. On a careful consideration, I find force in the appellants' submission. It is noticed from the declaration and other relevant documents that the input utilised for all types of manufacture of Public Passenger Motor Vehicle (Body Building) is the same. There is no dispute raised by the department about the cross utilisation of the inputs or misuse of the inputs for manufacturing the final product. In the initial declaration filed on 4-3-1994, they have not indicated classification under 8703, while they had indicated 8702. It is the departments' case that only if they had declared Heading 8703, only then they become eligible for the Modvat credit. I notice that the appellants have declared the inputs under Heading 8703 in the declaration filed under 173B. It is further to be noticed that the appellants themselves filed a declaration at a later date, and the show cause notice was issued thereafter. Therefore, the plea that there is only a procedural lapse is required to be accepted. The Tribunal in the case of Indag Rubber Limited v. Collector of Central Excise, as reported in 1997 (93) E.L.T. 572 after noting earlier judgment had held that description given in the declaration is a broad description and the items can be clubbed in the broad description given in the declaration. It has held that the items were broadly described in the declaration filed before the department. It has held that admitted position is that the credit of duty was taken on the strength of duty paying documents; that there is no dispute that the goods were not received or were not used in the manufacture of final product.

Therefore, the Tribunal further observed that since the credit of duty has been taken on the strength of GP 1s/Bills of Entry and therefore, there cannot be any dispute about nonavailability of these documents.

The Tribunal has held that having regard to these facts that the goods were broadly described in the declaration filed and in fact receipt of the goods in their factory and utilisation of the inputs in the manufacture of final product is not in dispute therefore, their case is fully covered by clarification given by the Central Board of Excise and Customs dated 9-8-1988.1 notice that this judgment is totally applicable to the facts of the present case.

5. I notice that a similar view has been expressed by the Tribunal in the case of Khosla Cast Steel & Alloys Pvt. Ltd. as cited by the learned Counsel. A similar view has also been expressed by the Tribunal in the case of Kelvinator of India Ltd., wherein the Tribunal has noted that the CR Sheets and CR Sheets in coiled form both are classifiable under Chapter 72 and are thus declared inputs. The Tribunal held that minor variation in sub-heading number is not relevant when the goods fall under the same Chapter heading specified in the Notification. The Tribunal taken into consideration the earlier judgment rendered in the case of Chamundi Steel Re-rolling Mills. In view of the Tribunal's ruling on this point and the facts in question being similar inasmuch as that the appellants are manufacturer of motor vehicles and they had declared the goods under Heading 8703 in other registers and classification list and also there is no dispute on inputs and final products discharging duty and all the products - have same rate of duty, therefore, on peculier facts of this particular case the plea of the appellants is required to be accepted in terms of the ratio of the cited judgment. There is no cause for imposing penalty, therefore, the impugned order is set aside and appeal allowed.