TMI Blog1996 (9) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... ap received from the open market by M/s. Jagat Steel Pvt. Ltd. was clearly recognisable as non-duty paid and the deemed Modvat credit was not admissible as per the conditions laid down in the Ministry s order dated 7-4-1986 aforesaid. The assessee had not produced any evidence of payment of duty on the scrap in question. It was their plea that no such proof of payment of duty was required. The Assistant Collector of Central Excise, Patiala, who adjudicated the matter held that the deemed Modvat credit was not admissible on the scrap received from the open market without proof of payment of duty by the assessee during the period in question prior to 1-4-1987. He confirmed the demand of Rs. 38,963.11 The Collector of Central Excise (Appeals), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue in the case of M/s. Machine Builders Ors. v. Collector of Central Excise, Bolpur, reported in 1996 (83) E.L.T. 576 (Tribunal) = 1996 (12) RLT 817 (Tribunal). 5. I have carefully considered the matter in the Ministry s order F.No. B-22/5/86-TRU dated 7-4-1986 [at page T6 of 1986 (25) E.L.T.] issued under the 2nd Proviso to Rule 57G(ii), it was provided that no deemed credit shall be allowed if the inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty. The 2nd Proviso to Rule 57G(2) of the Central Excise Rules, 1944 (hereinafter referred to as the `Rules ) provided that having regard to the period that has elapsed since the duty of excise was imposed on any inputs, the position of demand and supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged to nil rate of duty, were not entitled to the deemed credit even during the period prior to 29-8-1986. It was further clarified that the amending order of 29-8-1986 was issued to deal with the problem of many manufacturers claiming deemed credit even in respect of scraps like bazar scrap (refer Ministry s Order F.No. B-22/30/86-TRU, dated 29-9-1986 at page 7 Annexure `C of the paper book). Directions dated 20-10-1987 applied only from 1-4-1987 the period with which we are not concerned in these proceedings. In this connection reference may be made to the Tribunal s decision in the case of Sri Krishna Steels v. Collector of Central Excise, 1989 (43) E.L.T. 640 (Tribunal). 6. The goods involved in these proceeds are rolls, cutti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were inputs which suffered duty, and the purpose was to ensure the benefit to those who use inputs in the manufacture of which duty has actually been paid but it might not be possible to produce duty paying documents which will unerringly connect the documents or duty payment with the particular inputs (refer Para 15 of the order). In Para 16 the mischief sought to be avoided by the deemed proviso had been discussed. It was observed that mischief could not have been overcome by stipulating that credit is available even if duty has not been paid on inputs, for that would be against the pivotal element of the scheme. If duty need not be paid and has not been paid, the question of duty paid being earned as credit did not arise. The only way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of our letter dated 13-6-1987 vide which permission for sale of the said inputs was obtained, is also enclosed for reference. The credit taken against this quantity of inputs weighing 42.263 MT amounting to Rs. 15,426.09 has already been repaid vide debit entries in our RG 23A Part II. This amount has also been included in the said demand show cause notice. It is not justified to demand the said amount back as it has already been reversed. This amount is required to be excluded from the demand on the grounds explained above. 10. In the show cause notice, recovery of credit of Rs. 38,963.11 was demanded and in the order-in-appeal the same demand had been confirmed. I consider that subject to verification, the appellants are entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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