1994 (7) TMI 148 - AT - Central Excise

Summary

Issues:
Challenge to order of Collector, Central Excise (Appeals) regarding modvat credit facility on scrap purchased from Rolling Mills.

Detailed Analysis:

Issue 1: Challenge to Collector (Appeals) Order
The appeal was filed against the order of the Collector, Central Excise (Appeals) by M/s. Achal Alloys Pvt. Ltd. The Collector upheld the impugned order, rejecting the appeal, as the appellants had purchased scrap from rolling mills where scrap is generated during the rolling process of ingots/billets. The Collector found no merit in the appellants' contention that the rolling mills sold melting scrap to them under their own invoices/bills.

Issue 2: Modvat Credit Facility
M/s. Achal Alloys Pvt. Ltd., manufacturers of steel ingots, opted for modvat credit facility on scrap purchased from Rolling Mills. The department issued a Show Cause notice questioning the modvat credit availed by the appellants, as the scrap was cleared at nil rate of duty on GP-1s. The appellant argued that the scrap was purchased from the open market and rolling mills, citing relevant legal precedents to support their claim.

Issue 3: Legal Arguments
The Managing Director of the appellant firm argued that the scrap purchased should be considered duty paid, citing judgments from Bombay High Court and Calcutta High Court. The appellant contended that the burden of proof lay with the department to establish that the scrap was non-duty paid, emphasizing the need for evidence to support such claims.

Issue 4: Department's Position
The JDR for the respondent argued that the appellants purchased scrap from rolling mills at nil duty, suggesting a lack of duty payment on the goods. The department maintained that modvat credit should be based on duty actually paid on goods, and in this case, there was no payment of duty on the scrap purchased from rolling mills.

Issue 5: Interpretation of Relevant Orders
The Tribunal examined the Board's order denying deemed modvat credit if goods were clearly recognisable as non-duty paid or charged to nil rate of duty. The Tribunal analyzed legal precedents and the wording of the order to determine the applicability of deemed credit in the case at hand.

Issue 6: Tribunal's Decision
After considering submissions and case law, the Tribunal found that the department had proven the scrap purchased was clearly recognisable as non-duty paid. The Tribunal upheld the impugned order, rejecting the appeal based on the burden of proof being met by the department regarding the duty status of the purchased scrap.

In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions, burden of proof, and the department's establishment of the non-duty paid character of the purchased scrap. The appeal was dismissed, affirming the Collector's decision regarding modvat credit on scrap purchased from Rolling Mills.