1997 (3) TMI 273 - AT - Central Excise

Summary

Issues:
- Whether the benefit of deemed Modvat credit was available to the inputs of brass and zinc scrap purchased by the appellant from dealers.
- Jurisdictional issues regarding the show cause notice issued by the Superintendent of Central Excise.
- Adequacy of evidence and findings in the adjudication order regarding the nature of the scrap materials.

Analysis:

The judgment involves two appeals concerning the availability of deemed Modvat credit for imported brass and zinc scrap purchased by the appellant. The Additional Collector disallowed the Modvat credit, claiming the scrap consisted of broken items unfit for further use. The appellant argued that the scrap was imported brass scrap, supported by invoices and Bills of Entry. They contended that the countervailing duty paid on the goods qualified for Modvat credit. The appellant cited relevant court decisions to support their claim, emphasizing the duty paid nature of the goods as evidenced by the Bills of Entry.

Regarding jurisdictional issues, the appellant challenged the show cause notice issued by the Superintendent of Central Excise, arguing that the Additional Collector should have issued it. They also questioned the basis of the adjudication order, highlighting the lack of specific evidence supporting the conclusion that the scrap was non-duty paid or exempt. The appellant presented Bills of Entry as evidence of duty payment, refuting the presumption made by the adjudicating authority.

The judgment addressed the arguments raised by both parties. It rejected the objection regarding the show cause notice issued by the Superintendent, stating that it did not affect the validity of the adjudication within the six-month period. The judgment agreed with the appellant's contentions regarding the inadequacy of evidence supporting the adjudication order's findings on the nature of the scrap materials. It emphasized the importance of factual evidence over presumptions in determining the eligibility for Modvat credit.

The judgment referred to previous Tribunal decisions, including a Larger Bench decision, to support the appellant's claim. It highlighted the requirement for the department to disprove a manufacturer's claim of goods not falling under non-duty paid categories. The judgment concluded by setting aside the impugned orders and allowing the appeals based on the lack of evidence supporting the exclusion of the scrap materials from Modvat credit eligibility.