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M/s. Ankur Steels Versus Commnr. Of Central Excise, Allahabad

2015 (8) TMI 199 - SUPREME COURT

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 on deemed basis, viz., the excise duty that was paid by the Railw .....

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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 credit to the appellant on the ground that the appellant had not .....

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shmi 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, wheels, fish plates, etc. The aforesaid raw materials/inputs are purc .....

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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 by the Railways when they originally purchased the aforesaid ma .....

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r 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 the said declaration. (2) A manufacturer who has filed a declara .....

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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 (52 of 1962)] or a warehouse as are clearly recognisable as being .....

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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 II of form R.G.23A every month and the Superintendent of Central .....

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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 deemed to have paid duty at the rate of ₹ 920/- per tonne, and .....

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g 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 was issued three show cause notices dated 28.07.1994, 19.09.1994 .....

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ting 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 excise duty when purchased by the Railways originally. The adjudi .....

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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 passed by the Assistant Commissioner. We have gone through the sai .....

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