2011 (7) TMI 316 - AT - Central Excise

Demand - Classification - Scrutiny - None appeared for the appellant though a notice for hearing had been sent to them well in time and the same had been acknowledged - Since the deemed modvat credit order dated 7.4.1986 was withdrawn in respect of iron and steel scrap with effect from 29.08.1986, the consignments of iron and steel scrap received upto 28.08.1986 would be eligible for deemed modvat credit irrespective of the date on which the entries were made in the RG-23A Part-II register, as the availability of deemed credit is linked with the quantity of the specified inputs lying in stock on or after 1.3.86 and upto 28.08.1986 - The Commissioner s impugned order has not given any finding that the Movat credit of Rs.10,83,763/- which has been denied, was in respect of the quantity of scrap which had actually been received in the factory after 28.08.1986 or before 28.08.1986 - Appeal is allowed by way of remand to adjudicating authority

Summary

Issues:
1. Availability of Modvat credit for iron and steel scrap, Graphite Electrodes, and Ramming Mix Mortar.
2. Denial of Modvat credit by the Commissioner.
3. Deemed Modvat credit withdrawal by the Government.
4. Date of receipt of consignments and eligibility for deemed Modvat credit.
5. Tribunal's judgment in a similar case regarding Modvat credit for iron and steel scrap.

Analysis:

The case involves the appellant, a manufacturer of iron and steel products, who availed Modvat credit for central excise duty paid on inputs. The dispute arose regarding the availability of Modvat credit for iron and steel scrap, Graphite Electrodes, and Ramming Mix Mortar. The department alleged that the appellant wrongly claimed Modvat credit, leading to a show cause notice for recovery of Rs. 51,16,101.18. The Commissioner, in the Order-in-Original, allowed Modvat credit for Graphite Electrodes and Ramming Mix Mortar but denied it for iron and steel scrap received after 29.08.1986 due to the Government's withdrawal of the deemed Modvat credit facility.

Regarding the availability of Modvat credit, the Commissioner held that the deemed credit for iron and steel scrap was available until 28.08.1986 but not for the period after the Government's order on 29.08.1986. The appellant contended that all scrap receipts were before 28.08.1986, supported by intimation and register entries. The Tribunal noted that the availability of deemed credit was linked to stock on or after 1.3.1986 and up to 28.08.1986. The Commissioner's order did not specify if the denied Modvat credit was for scrap received post 28.08.1986, necessitating a remand for clarification on the actual receipt date.

In light of the above, the Tribunal set aside the impugned order and remanded the matter for fresh adjudication to determine if the denied Modvat credit was for scrap received before 29.08.1986. The decision was based on the Tribunal's judgment in a similar case, emphasizing the importance of actual receipt dates for eligibility for deemed Modvat credit.