1996 (7) TMI 270 - AT - Central Excise

Summary

Issues:
1. Admissibility of Modvat credit on inputs purchased by the appellants.
2. Denial of deemed Modvat credit on copper scrap, wire, and aluminium.
3. Interpretation of the expression "clearly recognizable as non-duty paid."

Analysis:
1. The appellants challenged the order of the Collector, Central Excise (Appeals) dated 27th September, 1991, which disallowed the credit of duty under the Modvat scheme for inputs like foundry fluxes, Mata Powder, and Suraj Resin. The appellants argued that these inputs were essential for the manufacture of valves and cocks, citing a previous decision in their favor. The Collector (Appeals) upheld the disallowance of credit for copper scrap, wire, and aluminium, stating that the appellants failed to provide evidence that the goods were duty paid. The appellants contended that the expression "in or in relation to the manufacture of final products" should encompass the entire manufacturing process, relying on legal precedents.

2. The appellants contested the denial of deemed Modvat credit on purchases of copper scrap, wire, and aluminium. They argued that they were entitled to claim credit without producing duty payment documents, as per a Central Government order. The Asstt. Collector disallowed the credit under Rule 57-I, but the Collector (Appeals) upheld the decision only for copper scrap, wire, and aluminium. The issue was whether the goods purchased were clearly recognizable as non-duty paid. The Tribunal referred to a previous case and held that if no duty was paid on the goods, they could be deemed non-duty paid, justifying the denial of Modvat credit.

3. The Tribunal considered the interpretation of the expression "clearly recognizable as non-duty paid" in the context of Modvat credit eligibility. Referring to government orders, the Tribunal outlined four scenarios where duty might not be paid on goods. It concluded that the expression covered situations where duty had not been paid for any reason, such as nil rate of duty, exemption from duty, or non-clearance of goods. The Tribunal agreed with the lower authorities that since no duty paying document was produced for the purchased goods, they could be deemed non-duty paid, justifying the denial of Modvat credit.

In conclusion, the Tribunal upheld the Collector (Appeals) order, rejecting the appeal and denying Modvat credit on inputs and copper scrap, wire, and aluminium, as the goods were deemed non-duty paid due to lack of evidence of duty payment.