2010 (5) TMI 195 - AT - Central Excise

Cenvat/Modvat- deemed credit- A show cause notice was issued contending that the material has been received from a manufacturer under challans and, therefore, it was clear that no duty has been paid and, therefore, deemed credit was not available accordingly, proposing recovery of Rs. 6,468/-. The original authority dropped the proceedings initiated by the show cause notice. On appeal by the department, Commissioner (Appeals) allowed the appeal of the department and ordered recovery of the said amount. The party came up in appeal before the Tribunal and Tribunal rejected the appeal of the party. Thereupon, the party filed Central Excise Appeal before the Hon ble High Court and the Hon ble High Court vide order dated 15-1-2010, remanded the matter to the Tribunal.

Issues:
1. Deemed credit under Notification No. 3/MF/DR/332/30/87-TRU
2. Dispute over duty payment on re-rollable iron and steel products
3. Tribunal's decision on deemed credit eligibility
4. Verification of duty payment by the Department
5. Presumption in favor of the assessee
6. Applicability of earlier Tribunal order in the appellant's case

Deemed Credit under Notification:
The appellant received re-rollable iron and steel products and claimed deemed credit under Notification No. 3/MF/DR/332/30/87-TRU. The dispute arose when a show cause notice contended that since the material was received under challans from a manufacturer without duty payment, the deemed credit was not available. The original authority dropped the proceedings, but on appeal, the Commissioner (Appeals) ordered recovery. The Tribunal also rejected the appeal, leading to the appellant filing an appeal before the High Court, which remanded the matter back to the Tribunal.

Dispute over Duty Payment:
The key contention was whether the goods purchased by the appellant were duty paid or not. The Department argued that since the goods came from manufacturers, the appellants should have provided evidence of duty payment. The appellant, on the other hand, relied on the notification and previous Tribunal decisions in their favor to support their claim of deemed credit eligibility.

Tribunal's Decision on Deemed Credit Eligibility:
The Tribunal considered the submissions from both sides and noted that the notification granting deemed credit created a presumption in favor of the assessee that the goods were duty paid. The Department failed to prove that the goods were not duty paid or verify with the relevant Central Excise authorities. Additionally, the Tribunal highlighted that in the appellant's earlier case, the Tribunal had ruled in their favor, further supporting their claim for deemed credit.

Verification of Duty Payment by the Department:
The Tribunal criticized the Department for not verifying with the dispatching unit about the duty paid status of the inputs. The lack of verification led to baseless presumptions by the Department that the goods were not duty paid, strengthening the appellant's position.

Presumption in Favor of the Assessee:
Given the notification's provisions and the lack of evidence proving non-duty payment, the Tribunal emphasized that the presumption should favor the assessee. The burden was on the Department to establish exceptions mentioned in the notification, which they failed to do in this case.

Applicability of Earlier Tribunal Order:
The Tribunal highlighted that in the appellant's previous case, the Tribunal had ruled in their favor for a similar situation, further strengthening the appellant's argument for deemed credit eligibility. Consequently, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order and reinstating the original authority's decision in favor of the appellant.

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