1998 (3) TMI 339 - AT - Central Excise

Summary

Issues:
Aggrieved with Order-in-Original demanding duty amounts, Deemed credit facility under Rule 57G(2) of Central Excise Rules, Allegations of improper documents for credit memos and bills, Thickness specification of sheets/coils for deemed credit eligibility, Denial of Modvat credit, Principles of natural justice violation, Government Order specifying eligible inputs, Dispute regarding thickness of CR Coils/HR Coils, Board's clarification on sheets and plates, Evidence supporting thickness claim, Rebuttable presumption on thickness of sheets, Appeal decision and consequential benefits.

Detailed Analysis:

The appellants were aggrieved by the Order-in-Original demanding duty amounts based on the disallowance of deemed credit of duty on inputs taken during two periods. The Commissioner alleged that the appellants had utilized deemed Modvat credit for payment of duty on final products using improper documents lacking details of the thickness of the purchased sheets/coils. The Department contended that deemed credit could only be availed for sheets/coils with a thickness not exceeding 5 mm. The appellants argued that it was not always possible to specify the exact thickness in invoices for market-purchased sheets/coils. They provided evidence to show that the machinery could only work with sheets below 5 mm thickness and that Central Excise officers had verified the thickness previously. The appellants also highlighted the commercial understanding of sheets versus plates based on thickness. They criticized the denial of Modvat credit on technical grounds, citing the Government's intent to ease manufacturers' document procurement challenges.

The Department defended the impugned order by referring to the Government Order specifying eligible inputs as sheets of thickness not exceeding 5 mm. They argued that the documents did not show the actual thickness of the purchased sheets and that the Commissioner considered only specific periods for disallowing the deemed Modvat credit. The Tribunal reviewed the submissions and records, referencing a previous judgment on deemed credit. The dispute centered on whether the CR Coils/HR Coils purchased by the appellants qualified as sheets of thickness not exceeding 5 mm as per the Government Order. The lack of thickness specification in the documents was noted. The appellants relied on various materials to establish the thickness claim, including a Technological Institute certificate and industry standards. The Tribunal considered the Board's clarification distinguishing sheets and plates based on thickness and found merit in the appellants' arguments.

The Tribunal highlighted the Board's clarification on sheets and plates, emphasizing the distinction based on thickness. The appellants' use of terms like "CR Coils" and "HR Coils" was deemed to cover sheets falling within the specified thickness in the Government Order. The Tribunal acknowledged the absence of exact thickness specification in the invoices but allowed the appellants to support their claim with other evidence due to the deeming provision's purpose. The evidence presented by the appellants, including expert opinions and industry standards, led to a rebuttable presumption favoring the appellants' eligibility for the benefit under the Government Order. Consequently, the appeal was allowed, and the impugned order was set aside with consequential benefits to the appellants in accordance with the law.