1992 (5) TMI 96 - AT - Central Excise

Summary

Issues:
1. Eligibility for proforma credit under Rule 56A in respect of Turnings and Borings (Scrap).
2. Interpretation of Rule 56A regarding duty payment on raw materials for granting credit.
3. Maintainability of the appeal before the Collector (Appeals).
4. Time-barred appeal and condonability of delay.
5. Application of Government order under Rule 56A(3)(i)(b) proviso.
6. Classification and treatment of scrap arising from duty paid raw materials.

Analysis:

1. The appeal involved the eligibility of M/s. Bihar Foundry & Castings Ltd. for proforma credit under Rule 56A in respect of Turnings and Borings (Scrap) received from M/s. Telco. The Collector (Appeals) allowed the appeal, stating that the scrap arose from duty paid iron and steel products, making the respondents eligible for credit.

2. The main contention was the interpretation of Rule 56A regarding duty payment on raw materials for granting credit. The Collector argued that since duty was not paid on the scrap due to an exemption notification, the question of granting credit did not arise. It was emphasized that duty must be paid on the material for credit eligibility, regardless of the amount paid on the parent material.

3. The issue of maintainability of the appeal before the Collector (Appeals) was raised. It was clarified that any person aggrieved by a decision of an officer lower in rank than a Collector can appeal to the Collector (Appeals). The appeal was deemed maintainable as it challenged a denial of benefits by the Assistant Collector.

4. The appellant raised concerns about the appeal being time-barred. The date of the Assistant Collector's letter and the appeal date were analyzed. The delay was deemed condonable as the letter did not specify the appellate authority clearly, and the respondents sought clarification promptly.

5. The application of the Government order under Rule 56A(3)(i)(b) proviso was crucial. The Collector (Appeals) did not consider this order, which allowed deemed credit in certain situations without the need for Gate Passes. The order was found inapplicable to the type of scrap in question, leading to an incorrect decision by the Collector (Appeals).

6. The classification and treatment of scrap arising from duty paid raw materials were debated. The Tribunal concluded that the starting material and final product are distinct, each attracting appropriate duty rates. Treating all products from duty paid raw materials as duty paid was deemed impractical, leading to the appeal being allowed and the order-in-appeal set aside.