2000 (10) TMI 343 - AT - Central Excise

Summary

Issues:
Admissibility of Modvat credit on inputs purchased from railways and open market.

Analysis:
1. The appeal dealt with the admissibility of Modvat credit claimed by the appellant on inputs like old scrap of railway material, M.S. Ingots, and other M.S. Scrap. The Assistant Commissioner allowed the credit, but the department appealed, resulting in the Commissioner (Appeals) allowing only a partial credit. The main issue was whether M.S. Scrap purchased from railways in auctions and open market qualifies as duty paid. The Commissioner (Appeals) noted that these items, being auctioned by railways, did not attract duty as they were unserviceable railway parts. The purchase invoices did not indicate duty payment, leading to the conclusion that the scrap was non-duty paid.

2. The appellant argued citing Board's Orders and Trade Notices, while relying on a CEGAT decision in a similar case. However, the Commissioner (Appeals) referenced a CEGAT Larger Bench decision in Machine Builders case, which was further affirmed in Indian Plastics Ltd. case. These decisions clarified that inputs clearly recognizable as non-duty paid, for any reason, are ineligible for Modvat credit. The Tribunal dismissed a similar case involving rejected railway rails as non-duty paid, reinforcing the principle.

3. Considering the precedents and the lack of evidence of duty payment on the purchased scrap material, the Tribunal upheld the Commissioner (Appeals) order, denying Modvat credit to the appellant. The absence of documentation proving duty payment on the scrap material led to the conclusion that the inputs were clearly recognizable as non-duty paid, making them ineligible for Modvat credit.

In conclusion, the Tribunal rejected the appeal, aligning with the Commissioner (Appeals) decision, as the purchased scrap material from railways and open market was deemed non-duty paid, thus not qualifying for Modvat credit.