2008 (12) TMI 110 - AT - Central Excise

Credit on scrap obtained from breaking of imported as per Not. 177/86-C.E. appellant by relying upon them Trade Notice No. 38/99 issued by CCE, Chandigarh submit that the scrap obtained by breaking of imported ships would not be covered by the restriction clause in the above Notification revenue relying upon the decision of Tribunal in the case of M/s. Sardar Steel Mills, has been rejected by Tribunal in case of Vidyaram Steel Re-Rolling Mills benefit not deniable to appellant

Summary

Issues:
Modvat credit denial based on duty paid on inputs obtained from breaking imported ships; Reliance on Trade Notice for benefit extension; Validity of Trade Notice vs. Tribunal's judgment on restriction application to scrap from ships; Applicability of Tribunal's decision in another case; Appeal outcome.

Modvat Credit Denial:
The appellant's Modvat credit was denied due to availing actual credit of duty paid on inputs obtained from breaking imported ships, limited to specific amounts as per Notification No. 177/86-C.E. The issue was whether the appellant could avail full credit beyond the specified limits.

Reliance on Trade Notice:
During adjudication, the appellant relied on Trade Notice No. 38/99 to argue that the restriction clause in the Notification did not cover scrap from breaking imported ships. The contention was that the Revenue was bound by the circular, requiring benefit extension to the assessee based on the Trade Notice.

Validity of Trade Notice vs. Tribunal's Judgment:
The Commissioner (Appeals) rejected the Trade Notice's reliance, citing a Tribunal judgment in M/s. Sardar Steel Mills where it held that the restriction applied to scrap from both Indian and imported ships. The issue was whether the Trade Notice could override the Tribunal's interpretation of the restriction clause.

Applicability of Tribunal's Decision:
The Tribunal considered the Tribunal's decision in M/s. Sardar Steel Mills but disagreed with it in the case of M/s. Vidyaram Steel Re-Rolling Mills, following numerous decisions favoring the assessees. The question was whether the Tribunal's decision in a previous case could be applied consistently to the present case.

Appeal Outcome:
The Tribunal, noting the Trade Notice in favor of the assessee during the relevant period and differing views in Tribunal judgments, set aside the impugned order and allowed the appeal, granting consequential relief to the appellant. The decision highlighted the importance of consistent application of legal interpretations and precedents in tax matters.