2005 (5) TMI 447 - AT - Central Excise

Summary

Issues:
Entitlement to deemed credit under Notification No. 58/97 when duty on inputs not fully paid.

Analysis:
The central issue in the present appeal was whether the appellants could claim deemed credit under Notification No. 58/97 despite the manufacturer not fully discharging the duty on the inputs. The notification permitted deemed credit for inputs purchased from iron and steel manufacturers who had paid duty under Section 3A of the Central Excise Act. The appellants sought a 12% deemed credit under this notification, but it was discovered that the duty paid on the inputs was only 13.388 per month, deemed insufficient for full duty discharge. Consequently, the benefit of deemed credit was at risk of being denied to the appellants.

The judgment referred to the decision in Vikas Pipes v. Commissioner of Central Excise, Chandigarh-II, which established that once a certificate confirming duty payment under Section 3A was provided, the buyer of the inputs need not scrutinize the exact amount of duty paid. This principle was further upheld in the case of Arvind Steel & Agro Industries v. Commissioner of Central Excise, Chandigarh, emphasizing that as long as the purchase was directly from a manufacturer who had discharged duty under Section 3A and the invoice declared the appropriate duty payment, the conditions of the notification were satisfied. Any duty shortfall should be recovered from the inputs manufacturer rather than penalizing the recipient of the inputs who met all notification requirements.

In light of the settled legal precedents and the clear interpretation of the notification's conditions, the impugned order was set aside, and the appeal was allowed in favor of the appellants. The judgment emphasized the importance of adhering to the notification's stipulations and ensuring that duty obligations were met by the manufacturer rather than unfairly penalizing the recipient of the inputs who had fulfilled all necessary conditions for deemed credit.

This comprehensive analysis of the judgment highlights the key legal principles applied in determining the appellants' entitlement to deemed credit under Notification No. 58/97 despite the manufacturer's partial duty payment on the inputs.