1997 (9) TMI 202 - AT - Central Excise

Summary

Issues:
- Burden of proof on the manufacturer claiming deemed credit
- Interpretation of Rule 57G regarding recognizability of goods
- Requirement of evidence for duty payment on goods purchased
- Applicability of past tribunal judgments in similar cases

Analysis:
1. The central issue in this case revolved around the burden of proof on the manufacturer claiming deemed credit. The Collector held that the initial burden was on the appellants to prove that the inputs on which the deemed Modvat credit was taken were recognisable as non-duty paid or charged to nil rate of duty. The appellants failed to discharge this burden, leading to a direction to reverse the amount and imposition of a penalty.

2. The facts of the case revealed that the appellants, engaged in manufacturing steel ingots and iron products, purchased scrap of iron and steel from the market. The department alleged that the appellants did not provide evidence of duty payment on the scrap, questioning their entitlement to claim deemed Modvat credit. The appellants argued that they had produced bills for verification and contended that it was unnecessary to prove duty payment since they had duty paying documents.

3. The interpretation of Rule 57G regarding the recognizability of goods was crucial. The appellants argued that goods lying in a factory, Customs area, or warehouse were recognisable as non-duty paid. They cited past tribunal judgments to support their stance that the onus was on the department to prove recognizability of goods. They emphasized the availability of challans for verification and sought relief based on previous tribunal decisions.

4. On the other hand, the department contended that the appellants failed to provide evidence of duty payment on the goods purchased from the market. They highlighted the consolidated entry made by the appellants, indicating a lack of separate bills and challans. The department supported the findings of the lower authorities in this regard.

5. The Tribunal, after hearing both sides, focused on whether the purchases were covered by bills/challans and if these documents were presented before the lower authorities. The Tribunal analyzed the Collector's observations and the submissions made by the appellants. Notably, the appellants had taken a stand and offered verification of challans/bills, similar to cases where deemed Modvat credit was allowed based on such evidence.

6. Ultimately, the Tribunal found that the Modvat credit was admissible to the appellants based on the facts of the case and the precedents cited. The appeal was allowed, providing consequential relief in accordance with the law. The judgment emphasized the importance of providing evidence of duty payment and the recognizability of goods in claiming deemed credit, while also highlighting the significance of past tribunal decisions in similar matters.