9911796707
TMI Blog1998 (7) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Collector who by the impugned order-in-original, dated 21-4-1995 confirmed the demand for the said amount and imposed a penalty of Rs. 9,50,000/-. The appellants in the present appeal have prayed for the setting aside of the said order. 2. Facts briefly are : The appellants at the relevant time were engaged in the manufacture of iron and steel products falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. They were also availing the facility of Modvat credit in respect of duty paid on the inputs used in or in relation to the manufacture of their final products. During the period June, 1986 to August, 1986, the appellants took deemed credit on waste and scrap of iron and steel to the tune of Rs. 38,79 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas `chargeable to Nil rate of duty' meant that the goods attracted a Nil Tariff rate, `non-duty paid goods' meant that they were such goods on which duty was no doubt required to be paid but, in fact, duty had not been paid. Ld. Collector held that even if the goods had become wholly exempt from duty by notification, the ultimate effect would be the same, viz., they are chargeable to Nil rate of duty. The Collector observed that the concept of deemed credit had been clearly brought out in the second proviso to Rule 57G(2) in as much as it was to allow deemed Modvat credit without production of documents evidencing payment of duty only when the duty is leviable on such inputs. It was another matter that the buyers of inputs might not be ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Harbans Singh, ld. Advocate who argued the case before us for the appellants contended that in terms of the second proviso to Rule 57G(2) the Central Government was empowered to direct certain inputs as are clearly recognisable as non-duty paid to be deemed to be duty paid and credit of duty in respect of the said inputs may be allowed without production of documents evidencing payment of duty. After considering the representations from various quarters explaining their difficulties in availing credit on iron and steel articles due to their inability to produce duty paying documents in respect of their inputs, the Central Govt. had issued a direction under the second proviso to Rule 57G(2) on 7-4-1986 allowing deemed credit on finished prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the inputs were purchased from the market. The Collector had rejected the appellants' claim without relying on any document to show that the inputs in question were received from manufacturers. Ld. Counsel also drew attention to the fact that the Collector had failed to consider the implications of Notification 208/83-C.E. as amended by Notification 54/86-C.E. which granted exemption to waste and scrap subject to certain conditions. In support of his contentions, ld. Counsel relied on the following case law : (a) Machine Builders v. CCE [1996 (83) E.L.T. 576 (Tribunal) L.B.]; (b) Nahar International v. CCE [F.O.No. 628/97, dated 26-5-1997]; and (c) Mahavir Spinning Mills v. CCE [F.O.No. 834/97, dated 7-7-1997]. 5.&ems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been satisfied. Following the decision of the Larger Bench in Machine Builder's case the Tribunal had in Nahar International Ltd., supra, held that deemed Modvat credit would be allowable to iron and steel scrap procured from the market in terms of Notification No. 54/86. Likewise, in Mahavir Spg. Mill's case, supra, also the Tribunal had held that deemed credit was allowable for scrap purchased from the open market from Kabbadies in terms of Notification No. 54/86. The Tribunal observed that the exemption granted under Notification No. 54/86 was a conditional one and the onus was on the Department to prove that the goods were non-duty paid. Since the Department had not brought any evidence on record to prove that the goods were non-duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atent that duty has actually not been paid for any reason such as the rate of duty in stated to be nil as per Schedule to the Tariff Act or where the inputs are wholly exempted from duty and also where the exemption is conditional, the conditions should be shown to have been satisfied. In the instant case waste and scrap of iron was admittedly exempted from the whole of the duty of excise as per Notification No. 208/83, as amended. However, we also note that Notification No. 54/86-C.E. was a conditional Notification. We observe that the Department has not produced any evidence to establish that the inputs in question are clearly recognisable as non-duty paid. In Final Order No. A/834/97-NB in Mahavir Spinning Mills v. CCE and in Final Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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