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2015 (8) TMI 199 - SUPREME COURT

2015 (8) TMI 199 - SUPREME COURT - 2015 (322) E.L.T. 178 (SC) - Cenvat / MODVAT Credit - Duty paying documents - Duty paid by Railway - only reason for denying the MODVAT credit is that the purchase bills of scrap from Railways in auction do not indicate the rate and amount of duty paid on the scrap/inputs at the time of clearance/sale by the Railways - whether the appellant is entitled to claim the credit of the said duty paid by the Railways - Held that:- Appellant was claiming MODVAT credit o .....

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after referred to as 'CEGAT') where appeal was preferred by the appellant against the order of the Commissioner and the CEGAT also dismissed the appeal observing that the appellant had not paid any duty at the time of purchase of the material from the Railways.

The High Court vide the impugned judgment has dismissed the appeal of the appellant and while doing so, it has again fell into the same error as was committed by the CEGAT or the Commissioner, viz., denying the deemed MODVAT c .....

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ank Adhyaru, Sr. Adv. & Mr. Arijit Prasad, Adv. & Ms. Rashmi Malhotra, Adv. & Mr. B. Krishna Prasad, Adv. ORDER In order to decide the instant appeal, let us take stock of the facts which are not in dispute. These are as follows: The appellant herein is engaged in the manufacture of bars and rods of mild steel falling under Chapter 72 of the Central Excise Tariff Act, 1985. These bars and rods of mild steel are manufactured from rollable and re-rollable old and discarded rails, wheel .....

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of the duty which was already paid by the Railways on the rods, wheels, fish plates, etc., when the Railways initially purchased the same and which the Railways sold to the appellant after using the said products for a number of years. It is also a matter of record that at the time of purchase of the discarded rods, wheels, fish plates, etc., from the Railways in auction, the appellant did not pay any excise duty. As pointed out above, the appellant wants credit of the excise duty which was paid .....

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dure to be observed by the manufacturer. - (1) Every manufacturer intending to take credit of the duty paid on inputs under rule 57A, shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said Assistant Collector may require, and obtain a dated acknowledgment of .....

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in this behalf evidencing the payment of duty on such inputs:] Provided further that having regard to the period that has elapsed since the duty of excise was imposed on any inputs, the position of demand and supply of the said inputs in the country and any other relevant considerations, the Central Government may direct that with effect from a specified date, all stocks of the said inputs in the country, except such stocks lying in a factory, customs area [as defined in the Customs Act, 1962 ( .....

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accompanying the goods, has been paid. (3) A manufacturer of the final products shall maintain, - (a) an account in Form R.G.23A, Parts I and II; (b) in respect of duty payable on final products, an account-current with adequate balance to cover the duty of excise payable on the final products cleared at any time. (4) A manufacturer of the final products shall submit to Superintendent of the Central Excise the original documents evidencing the payment of duty along with extracts of Parts I and I .....

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irect, without production of documents evidencing the payment of duty. It is in exercise of this power contained under the aforesaid proviso, that notification dated 13.07.1992 was issued on the subject of "Modvat-Deemed credit in respect of re-rollable material (Chapters 72 & 73)". As per this notification, in respect of ingots and re-rollable materials of iron or steel purchased from outside and lying in stock on or after the 07th day of July, 1992 with the re-rollers may be deem .....

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able materials of iron and steel purchased from outside and lying in stock on or after 01.04.1994, it is again deemed that duty has been paid thereupon and the credit of the duty is allowable under Rule 57A of the said Rules at the rate of ₹ 920/- per tonne. The only conditions are that the material is used without undergoing the process of melting and the goods which are manufactured fall under Chapter 72 or 73 of the Schedule to the Central Excise Tariff Act, 1985. The appellant herein w .....

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would show that a finding of fact is arrived at by the adjudicating authority that there was no melting of the aforesaid inputs while manufacturing the bars and rods of the iron and steel. The adjudicating authority also recorded a finding that the goods in question which were purchased by the appellant as scrap from the Railways and became inputs for it to manufacture its own goods were not dutiable. Further no evidence was produced by the Revenue to the effect that they were exempt from the e .....

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ied the aforesaid notifications dated 13.07.1992 and 01.03.1994 and held that in these circumstances, the deeming provisions contained in those notifications would get attracted and the appellant shall be entitled to the MODVAT credit at the rate of ₹ 920/- per tonne which is the rate specified in the said notifications. Not satisfied with this outcome, the Revenue preferred appeal before the Commissioner. The Commissioner allowed the appeal and set aside the Order-in-Original which was pa .....

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tion of availment of deemed credit does not arises. We may point out at this stage itself that the aforesaid reasons given by the appellate authority are clearly erroneous inasmuch as there was no such obligation on the part of the appellant to pay the excise duty at the time of purchase of the material from the Railways. On the contrary, the appellant was claiming MODVAT credit on deemed basis, viz., the excise duty that was paid by the Railways at the time of purchase of the said material whic .....

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