1997 (3) TMI 396 - AT - Central Excise

Summary

Issues:
- Appeal against the order passed by the Commissioner of Central Excise & Customs confirming the dropping of the show cause notice.
- Legality of deemed modvat credit availed on "M.S. Sheets" purchased as waste & scrap.
- Interpretation of Rule 57G of the Central Excise Rules, 1944.
- Government orders dated 7-4-1986 and 29-8-1986 regarding duty payment on inputs.
- Recognition of scrap as non-duty paid under Notification No.208/83-CE.

Analysis:
The case involves an appeal filed by the Department against the order passed by the Commissioner of Central Excise & Customs confirming the dropping of a show cause notice issued to the respondents. The dispute primarily revolves around the legality of the deemed modvat credit availed by the respondents on "M.S. Sheets" purchased as waste & scrap. The Department alleged that the modvat credit of Rs. 29,12,089.70 was wrongly availed by the respondents. The Government orders dated 7-4-1986 and 29-8-1986 play a crucial role in this case, particularly in clarifying the duty payment on inputs purchased from outside.

The interpretation of Rule 57G of the Central Excise Rules, 1944 is significant in determining the procedure to be observed by the manufacturer regarding duty credit. The second proviso to sub-rule to Rule 57G empowers the Central Government to direct the allowance of duty credit on inputs without the production of documents evidencing the payment of duty under certain conditions. The Government orders dated 7-4-1986 and 29-8-1986 specify the duty rates and conditions for availing credit on inputs, including steel and iron scrap.

Regarding the recognition of scrap as non-duty paid under Notification No.208/83-CE, the Department contended that the scrap in question was exempted under the notification and hence should be recognized as non-duty paid. However, the Tribunal found that the steel scrap purchased by the respondents was not covered by the exemption notification, as the relevant sub-headings were not listed in the notification. Therefore, the contention that the scrap was clearly recognisable as non-duty paid was rejected.

In conclusion, the Tribunal declined to interfere with the order impugned and dismissed the appeal. The decision was based on the findings related to the interpretation of the Government orders, the recognition of scrap as non-duty paid, and the specific conditions outlined in the relevant notifications.