1998 (5) TMI 240 - AT - Central Excise

Summary

Issues:
1. Availing Modvat credit on own input waste and scrap of steel.
2. Denial of deemed credit on waste and scrap purchased from outside market.
3. Recovery of duty on waste and scrap under Rule 57-I.
4. Appeal against Assistant Commissioner's order confirming demand.
5. Commissioner of Central Excise (Appeals) remanding the matter.
6. Entitlement to Modvat credit for stock on hand up to 31-3-1986.
7. Interpretation of proviso (2) to Rule 57H regarding credit of duty paid on inputs.
8. Discrepancies between grounds of appeal and show cause notice.
9. Permissibility of raising new grounds in appeal.

Analysis:

1. The Respondents, engaged in manufacturing iron and steel products, sought Modvat credit on their own input waste and scrap of steel. They also applied for transitional facility under Rule 57H for credit of duty on inputs in stock. The Assistant Commissioner issued a show cause notice questioning the deemed credit on waste and scrap purchased from the open market, leading to a demand for recovery of duty under Rule 57-I.

2. Upon appeal, the Commissioner of Central Excise (Appeals) remanded the matter, and in subsequent proceedings, confirmed the demand for recovery. However, a further appeal resulted in the Commissioner allowing the Respondents' appeal, stating their entitlement to Modvat credit for stock up to 31-3-1986 under Rule 57H.

3. The Department contended that the Commissioner erred by ignoring proviso (2) to Rule 57H, which disallows credit if duty was paid on inputs before 31-1-1996. The Department argued that most of the applied quantity had invoices issued before 31-3-1986, making the transitional facility inapplicable to the Respondents.

4. The Respondent's representative argued that the Department's grounds differed from the original show cause notice, making them impermissible. The show cause notice focused on the inadmissibility of deemed credit due to non-duty paid inputs, while the Department's appeal centered on the duty paid before 31-3-1986, an issue not addressed previously.

5. The Tribunal found the Department's new ground impermissible, as it was not part of the original charge or addressed by lower authorities. The Department's appeal challenging the Commissioner's order based on this new ground was rejected, as it was not considered during the initial proceedings, precluding its introduction at the Tribunal level.