1996 (9) TMI 379 - AT - Central Excise

Summary

Issues:
1. Availment of deemed Modvat credit for iron and steel inputs.
2. Interpretation of Ministry's order dated 7-4-1986 and Notification No. 208/83-C.E.
3. Validity of deemed credit on inputs purchased from the open market.
4. Application of Tribunal's larger bench decision in similar cases.

Detailed Analysis:

1. The appeal concerned the availment of deemed Modvat credit for iron and steel inputs purchased from the open market for manufacturing motor cycle parts and other items. The respondent had taken deemed credit at a specified rate based on Ministry's Order No. B22/5/86/TRU dated 7-4-1986. The Revenue alleged non-compliance with conditions for availing credit, leading to a demand for duty. The Assistant Collector held the credit inadmissible due to the inputs being non-duty paid under Notification No. 208/83-C.E. The Collector (Appeals) set aside this decision, prompting the Revenue's appeal.

2. The Tribunal considered the matter in light of written submissions and past decisions. The Ministry's order specified conditions for deemed credit, including the requirement for duty-paying documents for inputs received. The Tribunal referred to Notification No. 208/83-C.E., which exempted duty on final products made from specified goods where duty had already been paid. The Tribunal also referenced a larger bench decision regarding the availability of deemed credit in similar cases.

3. The Tribunal noted that the respondents purchased iron and steel inputs from the open market without valid duty-paying documents, rendering them non-duty paid. The Ministry's order allowed deemed credit subject to specific conditions, which the respondents failed to meet. The Tribunal emphasized that the final products, in this case, were exempt from duty under Notification No. 208/83-C.E., making the inputs non-duty paid.

4. Referring to a previous case before the larger bench, the Tribunal highlighted the exemption under Notification No. 208/83-C.E. for certain goods. The Tribunal clarified that even if inputs were purchased from the open market, the benefit of deemed credit was not applicable if the goods were exempt from duty. The Tribunal upheld the Revenue's appeal based on the larger bench decision and set aside the Collector of Central Excise (Appeals) order.

In conclusion, the Tribunal ruled in favor of the Revenue, holding that the deemed credit on non-duty paid inputs purchased from the open market was not admissible under the relevant notifications and Ministry's order. The decision was based on the interpretation of legal provisions, conditions for availing credit, and past precedents set by the Tribunal's larger bench.