1993 (7) TMI 171 - AT - Central Excise

Summary

Issues:
Admissibility of modvat credit on rejected ingot scrap and ingot cuttings received by M/s. Kartar Steels Pvt. Ltd.

Analysis:
The case involved the admissibility of modvat credit on rejected ingot scrap and ingot cuttings received by M/s. Kartar Steels Pvt. Ltd., a unit manufacturing iron and steel ingots. The Department alleged that M/s. Kartar Steels wrongly availed modvat credit against endorsed gate passes for goods not actually received as inputs. The rejected ingots and scraps received were claimed to be different from those cleared by the original manufacturers. The Department confirmed a duty demand and imposed penalties, leading to appeals filed by both parties.

During the hearing, the learned Counsel argued that the same ingots received by M/s. Shanti Steel Industries and M/s. Hamco Industries from original manufacturers were supplied to M/s. Kartar Steels. Statements from the Managing Director of Hamco Industries and the Proprietor of Shanti Steel Industries supported this claim, stating that the rejected ingots were sold as scrap or cuttings to M/s. Kartar Steels with validly endorsed gate passes. The suppliers provided reasonable explanations for the sale of rejected ingots, maintaining that the duty paid character of the inputs remained unchanged, regardless of the term "rejected" on the gate passes. The Tribunal agreed with this argument, noting the lack of evidence to suggest that the inputs supplied were different from those received by the suppliers from the original manufacturers.

Based on the discussions and findings, the Tribunal set aside the orders challenged by M/s. Kartar Steels and allowed their appeals, providing consequential relief if due. Consequently, the appeals filed by the Revenue against the decision were rejected, affirming the admissibility of modvat credit on the rejected ingot scrap and ingot cuttings received by M/s. Kartar Steels Pvt. Ltd.