1998 (1) TMI 120 - AT - Central Excise

Summary

Issues:
Deemed Modvat credit on rollable and re-rollable materials under Government of India's Order B-22/5/86-TRU; Exclusion of certain materials from the benefit of deemed credit; Burden of proof for duty payment on the appellants; Classification of goods under excluded headings; Government of India's Order dated 7-4-1986 criteria for deemed duty payment.

Analysis:
The judgment involves a dispute regarding the appellants' claim for deemed Modvat credit on rollable and re-rollable materials under a specific government order. The Asstt. Collector initially disallowed the credit, stating that the materials received were not mentioned in the specified headings of the government order. The Collector (Appeals) upheld this decision, emphasizing that re-rollable material might include items not covered by the order. The appellants argued that the materials were eligible for credit under certain tariff sub-headings and were duty paid, shifting the burden of proof to the Department.

The appellants presented invoices indicating the nature of the materials and contended that the excluded categories did not apply to their products. They highlighted that the goods were duty paid and that any doubt about duty payment should be proven by the Department. The Department, on the other hand, insisted that the appellants should have provided evidence of duty payment and that re-rollable materials were not mentioned in the relevant tariff headings. The CBEC clarification required proof that the inputs were from a rolling mill.

The Tribunal analyzed the evidence and legal precedents cited by the appellants, emphasizing that the burden of proving duty payment rested with the Department. The judgment noted that the impugned goods were not clearly classifiable under the excluded headings of the government order. It highlighted the criteria for deemed duty payment specified in the order and concluded that the Revenue failed to prove any exceptions that would disqualify the materials from deemed credit.

Ultimately, the Tribunal set aside the lower order and allowed the appeals based on the lack of evidence from the Department to establish non-duty payment for the goods. The judgment underscored the appellants' stance on the duty paid character of the materials and the absence of proof of any exemptions or reduced duty rates. The decision hinged on the Department's failure to discharge the onus of proving non-duty payment, leading to the allowance of the deemed Modvat credit for the appellants.