1991 (7) TMI 207 - AT - Central Excise

Summary

Issues:
1. Maintainability of Cross Objection
2. Eligibility of scrap for MODVAT credit

Analysis:
1. Maintainability of Cross Objection:
The judgment deals with the issue of the maintainability of a Cross Objection filed by the Respondents against the orders of the Collector of Central Excise (Appeals). The learned Advocate for the Respondents argued that the Cross Objection was merely a response to the pleas raised by the Collector in the appeal Memorandum and, therefore, legally not tenable. The Tribunal agreed with this argument and dismissed the Cross Objection as not maintainable.

2. Eligibility of scrap for MODVAT credit:
The main issue in this judgment revolves around the eligibility of scrap for MODVAT credit. The Appellant-Collector contended that the scrap purchased by the Respondents was not eligible for MODVAT credit as it was obtained from street hawkers and scrap dealers, indicating it was non-duty paid. However, the Respondents argued that the scrap used by them was of good quality and fell under specific chapters of the Central Excise Tariff. They highlighted that the nature of the scrap was already disclosed in their reply to the show cause notice. The Tribunal noted that no evidence was presented regarding the nature of the scrap used by the Respondents. It was emphasized that the burden of proof lies on the Department to establish that the scrap was non-duty paid, which they failed to do. The Tribunal referenced previous judgments to support the view that the Department must provide evidence to show that the goods were not duty paid. As a result, the Tribunal held that the appeal by the Appellant-Collector was not maintainable and dismissed it.

3. Second Appeal:
In a related appeal, the same arguments were presented by the Department regarding the eligibility of scrap for MODVAT credit. The Respondents maintained that the Department failed to prove that the scrap was non-duty paid. The Tribunal, based on the findings in the previous appeal, concluded that there was no merit in the Department's plea and dismissed the appeal.

In conclusion, the judgment clarifies the burden of proof in establishing the eligibility of scrap for MODVAT credit, emphasizing the necessity for the Department to provide concrete evidence to support their claims. The Tribunal's decision highlights the importance of factual verification and adherence to legal standards in such cases.