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Judgment
Jawahar Lal Gupta, J.—The respondent was registered for the manufacture of polythene bags. It claimed Modvat credit of Rs. 68,527/- for the quarter ending September, 1996 and of Rs. 49,561/- for the subsequent quarter ending with December, 1996.
On March 21, 1998 the adjudicating authority disallowed the credit and imposed a penalty of Rs. 19,000/-. This was so done on the ground that the unit was actually manufacturing polythene sheets and tubes. The respondent appealed. The Commissioner (Appeals) accepted the claim vide order dated October 28, 1999. The department challenged the order of the Commissioner (Appeals) before the Tribunal. Vide Order dated April 24, 2000 the appeal was dismissed. Hence this petition u/s 35H(1) of the Central Excise Act, 1944 for a direction to the Tribunal to refer the following question for the opinion of this Court :-
"Whether the Tribunal is correct in allowing the party to utilise Modvat credit for payment of duty on final product without declaring the same as their final products as required under Rule 57G of Central Excise Rules, 1944 ?"
We have heard Mr. Rajesh Gumber, learned Counsel for the petitioner. He contends that even though the unit had been registered for the manufacture of polythene sheets and tubes as well on a subsequent date, it was not entitled to claim Modvat credit for the manufacture of sheets etc. as it was not registered for that purpose during the two relevant quarters. Thus, the view taken by the Commissioner (Appeals) and the Tribunal cannot be sustained.
Admittedly the polythene bags can be made only from polythene sheets. Thus, the manufacture of polythene sheets would not be contrary to the initial registration. If the manufacture of sheets is essential for the making of polythene bags, the respondent shall be entitled to the credit as claimed by it.
Mr. Cumber submits that the Commissioner (Appeals) and the Tribunal have misconstrued the circular dated June 4, 1996. By this circular the Board had only directed the field staff to ignore minor variations.
We have perused the circular. It has been inter alia provided that the "credit of duty paid on inputs should be allowed so long as the description of the inputs and the chapter No. indicated in the declaration under the provisions of Rule 57G is correct. Credit should not be denied on the ground of minor variations in the classification of the inputs upto the six-digit level, or in the event of change in chapter heading given in the declaration, due to change in the practice of classification which does not affect the rate of duty". A copy of the circular is placed on record as Mark ''A''.
It is the admitted position that the inputs used by the respondent met with the requirements of the rules. So far as the end product is concerned, sheets were essential for the manufacture of polythene bags. A minor variation, even if it is assumed to exist, is really of no consequence in view of the circular of the Board. Still further, it has not been disputed that the goods were cleared from the factory in the presence of the staff of the department. Nobody is ever shown to have been raised any objection. In this situation and keeping in view the totality of circumstances, we find that the view taken by the Commissioner (Appeals) and the Tribunal is a possible one. It is not contrary to the real intention behind the circular issued by the Board.
No other point has been raised.
In view of the above, we find no merit in this petition.
It is consequently dismissed in limine.