1998 (3) TMI 276 - AT - Central Excise

Summary

Issues:
Denial of deemed Modvat credit on M.S. Ingots and Mis-rolls.

Analysis:
The appeal was filed against the denial of deemed Modvat credit on M.S. Ingots and Mis-rolls. The appellants, engaged in manufacturing angles and bars, claimed deemed Modvat credit under a Government Order. The Department contended that re-rollable material purchased from Central Railway and Kabaris was non-duty paid, thus not eligible for deemed Modvat credit. The lower authorities upheld the denial of credit based on this argument.

The consultant for the appellants argued that the goods in the country, except those in specific locations, are deemed duty paid. He cited various tribunal decisions and a High Court ruling to support the claim that the goods need not be clearly recognizable as duty paid for deemed credit. The consultant contended that the appellants' case aligned with the principles established in the cited cases, thus the appeal should be allowed.

On the other hand, the Revenue representative emphasized that the Modvat Scheme aims to alleviate the cascading effect of multiple point duty on final product prices. He highlighted the necessity for goods to be duty paid, asserting that only the requirement for producing duty documents had been eliminated. Referring to a Larger Bench decision, the representative stated that manufacturers seeking benefits under Government orders must demonstrate entitlement by proving duty paid status of goods. The Revenue representative argued that the appellants failed to provide evidence of duty payment on inputs, justifying the denial of deemed Modvat credit.

After considering the arguments and relevant decisions, the judge noted a circular equating old re-rollable scrap with duty paid scrap. The judge referenced the Larger Bench decision that analyzed various Government orders stipulating conditions for deemed Modvat credit. Notably, the judge observed that the Government letter in question did not require goods to be clearly recognizable as duty paid. Additionally, the judge distinguished previous tribunal decisions where the specific Government order was not considered.

Regarding M.S. Ingots, the judge concluded that deemed Modvat credit would be allowed based on the discussions and analysis. However, for Mis-Rolls produced from re-rollable material, the judge ruled that since deemed Modvat credit was already granted on the inputs, credit for Mis-Rolls was not admissible. Consequently, the appeal was allowed except for the deemed credit on Mis-Rolls, modifying the impugned order accordingly.