MASCHMEIJER AROMATICS I LTD Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) THIS appeal is filed against the order of the Collector of Central Excise (Appeals), Madras dated 15-12-87. The brief facts of the case are that the appellant has filed a declaration as required under Rule 57G of the Central Excise Rules for availing of MODVAT credit in respect of certain inputs to be used for certain specified finished excisable products. The appellants sent out some of the inputs (in respect of which they availed MODVAT credit) to another unit for purpose of processing and ultimate use in the finished product which were declared by them, without obtaining permission from the authorities. The appellant, however, reversed a sum of Rs. 66,117.74 representing as MODVAT credit on their being pointed out by the authorities that they had sent the inputs outside without following the procedure, as laid down under Rule 57F(2) of the Central Excise Rules, 1944. THIS Rule envisages a permission to be obtained for the purpose. The appellants, after reversing the MODVAT credit, approached the authorities for restoring the credit after according necessary permission. The reason given for not obtaining permission from the Department under Rule 57F(2), as pleaded before the lower authority, was that the appellants were not aware of the MODVAT procedure.

(2.) The learned Advocate for the appellant pleaded that the lapse on their part to obtain permission was due to ignorance of the MODVAT procedure and that for subsequent periods the appellants were accorded permission under Rule 57F(2). He has pleaded that this permission could even be treated post facto in respect of the inputs sent out earlier without obtaining the permission, so long as the other requirements for availing of the Modvat credit are satisfied.

(3.) WE observe that on the admitted fact the inputs in respect of which Modvat credit was obtained and taken earlier qualifies for the benefit of the Modvat and the omission is that the appellant failed to take necessary permission to send the inputs out for processing, as required under Rule 57F(2). It is observed that the Scheme of Modvat has been introduced with a view to lessen the burden on the assessees by allowing the credit of duty on inputs and so long as such credit was available to the appellants under the notification issued in this regard and the inputs have actually been used for the declared finished product, the benefit of the concession should not be denied to them. In the present case we find from the records that what has been held against the appellants is that they had sent the inputs out for processing without obtaining the permission of the competent authority as required under Rule 57F(2). The plead taken by the appellants is that they had nothing to gain by not taking permission as the inputs in question were used in the finished end-product declared by them. The learned Advocate was asked during the course of hearing whether he could satisfy the authorities that the said inputs, which had been sent to the other unit for processing, were ultimately used in the finished product, he has pleaded that the records would bear it out.