1999 (11) TMI 385 - AT - Central Excise

Summary

Issues:
1. Availment of deemed Modvat credit on aluminium waste and scrap.
2. Denial of credit based on alleged non-duty paid characteristics of goods.
3. Interpretation of Ministry's order and conditions for availment of deemed credit.
4. Application of legal principles regarding denial of Modvat credit.
5. Decision on the appeal and grant of consequential relief.

Issue 1: Availment of deemed Modvat credit on aluminium waste and scrap
The appellants availed deemed Modvat credit based on the Ministry's order prescribing credit at a specific rate per tonne on aluminium waste and scrap. The show cause notice sought to deny a portion of the credit taken by the appellants.

Issue 2: Denial of credit based on alleged non-duty paid characteristics of goods
The denial of credit was based on the assertion that waste and scrap of aluminium were exempted from Central Excise Duty, and therefore, the goods were non-duty paid. The Collector presumed that goods received from manufacturers under full exemption and from dealers as "fresh scrap" were cleared without payment of duty.

Issue 3: Interpretation of Ministry's order and conditions for availment of deemed credit
The consultant for the appellant cited relevant judgments to argue that the mere existence of the exemption notification did not automatically render all aluminium scrap non-duty paid. The Larger Bench judgment highlighted the need to demonstrate that goods were cleared without duty payment to deny the credit.

Issue 4: Application of legal principles regarding denial of Modvat credit
The Tribunal found that the show cause notice was issued based on a wrong understanding of the law. The order failed to substantiate the allegations made, and the Revenue did not follow the prescribed criteria for denying Modvat credit as per legal precedents.

Issue 5: Decision on the appeal and grant of consequential relief
The Tribunal set aside the impugned order, noting that the allegations lacked legal basis. The decision highlighted that denying credit based on traders' invoices not indicating duty payment went against the essence of the Modvat credit scheme. Consequently, the appeal was allowed with consequential relief granted to the appellant.

This detailed analysis of the judgment addresses the issues surrounding the availment of deemed Modvat credit, the denial of credit based on non-duty paid characteristics, the interpretation of Ministry's order, the application of legal principles in denying credit, and the ultimate decision on the appeal with the grant of consequential relief to the appellant.