TMI Blog1993 (6) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... Antartic Industries filed a declaration dated 21-3-1986 with the jurisdictional Assistant Collector as required under Rule 57G for modvat purposes wherein they declared the inputs indigenous/imported scrap (waste and scrap) for melting for manufacture of their finished product, steel ingots and steel castings. This declaration was accepted. Subsequently, a show cause notice was issued. Subsequently, the Department found that the appellants availed of Modvat Credit against gate passes for strips below 5mm thickness round cuttings, bars, hoops and CR end cuttings showing payment of duty @ Rs. 715/- per MT and Rs. 500/- per M.T. and the department was of the view that these materials were not in consonance with the declaration of inputs submitted by the appellants. The Assistant Collector disallowed the modvat credit and observed that the materials received by them under the gate passes were themselves in the nature of finished goods. The Assistant Collector's order was challenged in appeal before Collector (Appeals) who upheld the order on merits. The Collector (Appeals) in her impugned order found that the materials received by the appellants under gate passes, in question, describ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enches, the matter requires to be referred to a Larger Bench. The President constituted the present Larger Bench for considering the above question. 2.Arguing before the Larger Bench, the ld. Consultant, Sh. Sunder Rajan, submitted that there is no question of valuation or rate of duty involved in this appeal and the dispute is only regarding the quantum of modvat which the appellants can lawfully take credit of on the duty paid on the inputs. The ld. Consultant, further, submitted that the appellants, herein, as users of the input materials, do not have locus standi to raise a question of classification of the goods at the supplier's end. The ld. Consultant referred to the show cause notice issued in this case, which is to the effect of charging the appellants with contravention of the Central Excise Rules in as much as they have availed/utilised wrong Modvat Credit on round cuttings, M.S. bars, strips below 5 mm thickness falling under Chapter Headings 73.27, 7211.49, 7214.90, 7211.30 CETA' 1985 in the guise of melting scrap as inputs in the manufacture of steel ingots falling under Tariff Heading 7206.90. Therefore, the ld. Consultant pointed out the question is only of corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cleared under tariff item 7204.20. The duty payable under this heading was Rs. 365/- per MT as BED 5% affixed on the gate passes has been paid under protest. The local excise office is denying the Modvat on the plea that duty has been paid which is liable on the finished goods and not on the scrap. You are, requested to please intimate the circumstances under which duty at the higher rate is being paid but under protest. An early reply is requested please. Thanking you Yours faithfully, for ANTARCTIC INDUSTRIES LTD. SD/- DIRECTOR Copy to :- The Assistant Collector, Central Excise Division, LUDHIANA - with reference to the Show Cause Notice No. C. No. 20/D/CS/R-III/89/203 dated 22-3-1989 issued by the Superintendent, Central Excise Range-I III, LUDHIANA. It is requested that this case may please be kept pending till we receive the reply from the above party." A certificate was also produced from the supplier saying that they were paying duty on the materials under instructions from their jurisdictional Assistant Collector (Central Excise) at full rate of duty under protest. The certificate is as follows : "TO WHOMSOEVER IT MAY BE CONCERN" "The scrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al burden to the purchaser manufacturer, the latter can take credit for the additional amount in modvat accounts. Therefore, in a case where the supplier is paying duty under protest and the matter of classification after it gets finally settled, the consequential refund or additional duty can be adjusted by the mechanism of Rule 57E. Further, in such a situation, the action regarding correct classification of the input material lies in the hands of the Assistant Collector having jurisdiction over the supplier manufacturer. It is also observed that the department has laid down suitable procedure to work this out. Therefore, there is a lot of force in the submissions made by the 1d. Consultant that the matter of classification, even if in dispute, cannot be raised by user manufacture at his end. The department is also not without remedy in such instances by virtue of the provisions of Rule 57E. Therefore, it cannot be said in the present appeal which is filed by the manufacturer-user that the question of classification is involved at the user's end. As regards reference to notification in the orders of the lower authorities, it is seen that Notification 177/86 dated 1-3-1986 is a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the Claimant/manufacturer is indicated in Rule 57G. The second proviso to 57G(2) provides, inter alia, that "the manufacturer shall take all reasonable steps to ensure that the inputs acquired by him or goods on which the appropriate duty as indicated in the documents accompanying the goods has been paid." 9Therefore, I am unable to agree with the proposition that the claimant of Modvat benefit has no responsibility in the matter and could not be called in question in relation to any doubt or dispute relating to identity of the inputs, their classification or rate of duty. 10.In fact the classification and rate of duty are directly related to and dependent upon identity of the goods. Therefore, in cases where identity is in question, they automatically come into picture directly or indirectly as the case may be. 11.I also observe that the Notification 176/86 dated 1-3-1986 as amended from time to time, indicates the "goods notified for purposes of credit of duty under MODVAT". This notification provides a table and this table gives the description of inputs in column (2) and that of final products in column (3). It however, does not indicate the name or particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at some Special Benches are still dealing with Modvat cases (although both the sides have some how refrained from citing such cases.) 15.It may also be noted that under Rule 57B while considering Credit of duty in respect of inputs obtained from small scale manufacturers "it falls for determination as to whether it is a case where the duty on inputs has been paid under a notification issued under sub-rule (1) of Rule 8 (or sub-section (1) of Section 5 A of the Act) as the case may exempting such inputs from a part of the duty leviable there on the basis value of clearances of such inputs, during any specific period "be allowed at the rate otherwise applicable to such inputs but for the said notification" provided that "the said notification provides for grant of credit in respect of such inputs at such higher rates as may be specified therein." Similarly under Rule 57C since the credit is not to be allowed if final products are exempted the Assistant Collector may also have to resolve dispute(s) if any, in this respect and decide in the process whether "the final product is exempt from whole of the duty of excise leviable thereon or is chargeable to nil rate of duty." 16.It may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een whether the payment of duty at the rate of Rs. 715/- per M.T. and Rs. 500/- per M.T. (or any other rate for the matter) was required to be taken into account. It is also noticeable that the Department itself has referred to rate of duty of Rs. 500/- per M.T. and Rs. 365/- per M.T. in the documents before us. 18.In so far as departmental view point is concerned it is really difficult to find out as to what it actually is for the simple reason that strange as it may seem, while the matter was before the Special Bench the then D.R. chose to argue that it was a Regional Bench matter and when it was before the Regional Bench the then D.R. did not hesitate to take the line that it was a Special Bench matter, which shows, if anything, that the Department had not seriously made up its mind and this vascillation was visible during the course of hearing before the Larger Bench as well. It goes without saying that such a course serves no purpose and does not render any effective assistance to the court; and it can only be hoped that in future if difference of opinion or approach arises between D.R's Senior Officers of the Department will take note thereof and either give suitable instru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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