1996 (5) TMI 280 - AT - Central Excise

Summary

Issues:
1. Entitlement to deemed credit on aluminium waste and scrap.
2. Consideration of Trade Notice by the adjudicating authority.
3. Burden of proof on duty payment and limitation in Modvat Credit case.

Entitlement to Deemed Credit on Aluminium Waste and Scrap:
The appellants, manufacturers of aluminium ingots and products, availed deemed credit on aluminium waste and scrap as per Central Govt. directions. The lower authority held they were not entitled due to lack of manufacturing activity. The Counsel argued the impugned order was flawed as the Trade Notice by the Bombay Collectorate, allowing deemed Modvat Credit on specified inputs, was not considered. The Tribunal noted the importance of the Trade Notice, emphasizing the department's burden to prove duty payment status of inputs. The goods in the hands of the transport company were duty paid. Thus, the appeals were allowed for de novo adjudication by the lower authority after a personal hearing.

Consideration of Trade Notice by the Adjudicating Authority:
The Trade Notice permitting deemed Modvat Credit on specified inputs supplied by clients like Government bodies was crucial in the case. The Counsel requested a remand for the adjudicating authority to reconsider the matter in light of the Trade Notice. The Tribunal agreed that the Trade Notice was significant, highlighting the department's responsibility to establish duty payment status. The appeals were remanded for fresh adjudication, ensuring the appellants' awareness of the Trade Notice and granting them a personal hearing.

Burden of Proof on Duty Payment and Limitation in Modvat Credit Case:
In another appeal, the question of Modvat Credit and burden of proof on duty payment arose. The adjudicating authority had placed the burden on the appellants to demonstrate no suppression or non-duty paid goods, requiring verification. The Counsel argued that the department should prove non-duty paid status, not the appellants. The Tribunal agreed, stating the burden cannot be on the appellants for verifying duty payment. The matter was remanded for reevaluation, considering the submission that inputs were verified and RT 12 returns were filed. The appeals were allowed for a fresh examination on the burden of proof and limitation issues.

In conclusion, the Tribunal allowed all appeals by way of remand, emphasizing the significance of the Trade Notice, the burden of proof on duty payment, and the need for a fair assessment of entitlement to deemed credit on aluminium waste and scrap.