1998 (7) TMI 261 - AT - Central Excise

Summary

Issues:
1. Correctness of deemed Modvat credit availed by the appellants.
2. Interpretation of Ministry of Finance Order regarding conditions for deemed Modvat credit.
3. Applicability of deemed Modvat credit on materials recognized as non-duty paid.
4. Analysis of relevant judgments and their impact on the present case.
5. Interpretation of Rule 57G in relation to the availability of deemed Modvat credit.

Issue 1: Correctness of deemed Modvat credit:
The case involved the correctness of deemed Modvat credit availed by an SSI unit engaged in manufacturing M.S. round bars and M.S. strips using scrap materials. The Revenue contended that the scrap used did not qualify for deemed Modvat credit as it was recognized as non-duty paid material. The Assistant Collector confirmed the Revenue's stance, leading to the appeal before the Tribunal.

Issue 2: Interpretation of Ministry of Finance Order:
The appellant argued that the Ministry's order did not impose conditions regarding the non-duty paid status of materials for availing deemed Modvat credit. The conditions specified in the order were related to the use of re-rollable materials without melting and their purchase date. The appellant cited previous judgments to support their claim that the conditions were fulfilled, justifying the deemed Modvat credit.

Issue 3: Applicability of deemed Modvat credit on non-duty paid materials:
The Revenue contended that re-rollable material obtained from bazar scrap, being non-duty paid, did not qualify for deemed Modvat credit. The Revenue referenced Tribunal judgments supporting the view that such materials were ineligible for deemed credit, despite the absence of specific restrictions in the relevant order.

Issue 4: Analysis of relevant judgments:
The Tribunal noted previous judgments favoring the appellant's position, indicating a precedent for allowing deemed Modvat credit in similar cases. The Tribunal agreed with the reasoning in specific judgments and highlighted the absence of conditions regarding non-duty paid recognition in the Ministry's order dated 1-3-1994.

Issue 5: Interpretation of Rule 57G:
The Tribunal analyzed Rule 57G and emphasized that the Central Government lacked the authority to issue orders under the rule for excisable inputs recognized as non-duty paid if not located in specific areas. The Tribunal clarified that the absence of conditions for non-duty paid recognition in the 1994 order justified the appellant's entitlement to deemed Modvat credit. Additionally, the Tribunal dismissed the relevance of judgments cited by the Revenue in the context of the present case.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants based on the detailed analysis of the issues and relevant legal provisions.