1997 (12) TMI 404 - AT - Central Excise

Summary

Issues:
Burden of proof in case of conditional exemption.

Analysis:
The judgment revolves around the issue of burden of proof in the case of conditional exemption. The applicant, C.C.E., Chandigarh, raised a question regarding whether the burden of proof that the goods are not duty paid in the case of conditional exemption lies on the Department or the assessee. The argument presented was that the burden of proof rests on the assessee as they claim deemed Modvat credit. The Tribunal examined the language used by the Government of India in its order, which indicated that once the assessee claims that the goods are duty paid under a conditional exemption, the burden shifts to the Department to prove otherwise. The Tribunal emphasized that the Department must conduct inquiries and provide evidence to counter the claim made by the assessee.

Furthermore, the judgment delved into the Modvat scheme, highlighting the importance of duty paid specified inputs for the scheme to function effectively. It emphasized that the purpose of the scheme is to ensure that duty has actually been paid on inputs used in manufacturing. The Tribunal discussed the provisions of Rule 57G(2) and the intention behind the second proviso, which empowers the Government to implement deeming provisions for duty paid inputs. It clarified that the intention is not to extend benefits to inputs on which duty has not been paid but to provide relief to manufacturers who may lack documentary evidence of duty payment.

Moreover, the judgment analyzed the mischief sought to be avoided by the deemed proviso to Rule 57G(2) in the Government Order dated 7-4-1986. The Tribunal highlighted that the purpose was to prevent disentitlement of Modvat credit due to the absence of documents proving duty payment on inputs. It emphasized that the concession under the scheme applies when circumstances indicate that duty must have been paid, ensuring that the scheme is not misused.

Additionally, the judgment outlined the four contingencies in which duty may not be paid on goods, clarifying that the terms "clearly recognisable as being non-duty paid" encompass all inputs on which duty has not been paid. It concluded that in cases of conditional notification, the onus is on the Department to prove that the goods are non-duty paid. As the waste and scrap in question were subject to a conditional notification, the Tribunal rejected the reference application, stating that no point of law was involved in the case.

In summary, the judgment clarifies the burden of proof in cases of conditional exemption, emphasizing the role of the Department in proving that goods are non-duty paid under such exemptions. It provides detailed insights into the Modvat scheme, the intention behind deeming provisions, and the contingencies where duty may not be paid on goods.