1997 (9) TMI 310 - AT - Central Excise

Issues Involved:
1. Entitlement to deemed credit under specific orders.
2. Conditions for availing deemed credit.
3. Recognition of inputs as non-duty paid or exempted.
4. Applicability of deemed credit orders to re-rollable materials.
5. Period-specific applicability of deemed credit orders.

Issue-wise Detailed Analysis:

1. Entitlement to Deemed Credit Under Specific Orders:
The primary issue in the appeals by M/s. Sushila Steels Ltd. and M/s. H.V.R. Alloys & Steel revolves around their entitlement to deemed credit under Order No. 342/I/88/TRU, dated 12-7-1990. The appellants purchased re-rollable materials and used them without melting, claiming deemed credit. The Assistant Collector allowed the credit based on the specific order for re-rollable materials. However, the Collector (Appeals) held that since the inputs were exempt under Notification 202/88, deemed credit was not permissible. The Tribunal noted that the relevant deemed credit order for re-rollable materials did not include a clause excluding inputs recognizable as non-duty paid, thus allowing the credit.

2. Conditions for Availing Deemed Credit:
The Tribunal examined the conditions under which deemed credit could be availed. The general order under Rule 57G specified that no credit would be allowed if inputs were clearly recognizable as non-duty paid or wholly exempt from duty. However, the specific order for re-rollable materials did not include such a clause. The Tribunal emphasized that in the absence of a restrictive clause, the deemed credit could not be denied if the conditions of the specific order were met, as seen in the case of Pareek Pvt. Ltd. v. C.C.E., Bhubneswar.

3. Recognition of Inputs as Non-Duty Paid or Exempted:
The Tribunal considered whether the inputs were recognizable as non-duty paid or exempted. In the case of M/s. Jain Steel Industries, the Assistant Collector confirmed the demand on the grounds that the inputs were recognizable as non-duty paid. However, the Collector (Appeals) accepted the respondents' contention that the inputs were deemed duty paid unless proven otherwise by the department, referencing the Tribunal's decision in M/s. Omega Alloys Castings Pvt. Ltd. v. C.C.E., Indore.

4. Applicability of Deemed Credit Orders to Re-Rollable Materials:
The Tribunal noted that the government issued two separate deemed credit orders on 12-7-1990. One order was general, covering various metals and including a clause excluding non-duty paid inputs. The other order specifically addressed re-rollable materials and did not include such a clause. The Tribunal held that the specific order for re-rollable materials allowed deemed credit without the restrictive clause, thus supporting the appellants' claims.

5. Period-Specific Applicability of Deemed Credit Orders:
The Tribunal addressed the period-specific applicability of deemed credit orders. For M/s. Sushila Steels Ltd., the relevant period was from Sept. 1991 to Jan. 1992. For M/s. H.V.R. Alloys & Steel, the period was Feb. 1994, and the applicable order dated 12-7-1992 allowed deemed credit without a restrictive clause. In the department's appeal against M/s. Jain Steel Industries, the period was from 3-12-1986 to 19-6-1987. The Tribunal noted that no separate deemed credit order for re-rollable materials existed before 1-4-1987, and the general order with the restrictive clause applied. From 1-4-1987, a specific order for re-rollable materials allowed deemed credit without the restrictive clause.

Conclusion:
The Tribunal allowed the appeals filed by M/s. Sushila Steels Ltd. and M/s. H.V.R. Alloys & Steel, holding that the specific deemed credit orders for re-rollable materials did not include a clause excluding non-duty paid inputs. The department's appeal against M/s. Jain Steel Industries was partly allowed, with deemed credit not available up to 1-4-1987 but allowed thereafter based on the specific order for re-rollable materials. The penalty was reduced from Rs. 25,000 to Rs. 10,000.

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