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TMI Blog1992 (11) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... g scrap received without payment of duty under Chapter X of Central Excise Rules and imported scraps exempt from countervailing duty under Notification 2/79 as amended. 2. The brief facts of the case are that the appellants are engaged in the manufacture of steel ingots falling under Heading No. 72.06/sub-heading No. 7206.20 of the Schedule of the Central Excise Tariff Act, 1985 with the aid of electric furnace from various types of iron and steel scrap, ferro alloys. Under Notification No. 55/86-C.E., dated 1-3-1986 their said final product is chargeable to duty of excise at the rate of Rs. 315/- per metric tonne. During the relevant period, they purchased scrap of iron and steel from the open market, received steel melting scrap under C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A Part II. The liability of excise duty on the final product viz. steel ingots, was discharged from PLA as well as from input credit available in their aforesaid RG 23A Part II accounts. 3. A show cause notice dated 10-12-1987 the Collector of Central Excise, Kanpur was issued proposing levy of excise duty amounting to Rs. 26,92,053.90 involved on 8546.203 M.T. of steel ingots manufactured and a total 9597.175 M.T. waste and scrap received under Chapter X and shredded melting scrap and cleared during the period from 25-3-1986 to 17-12-1986 and proposing imposition of penalty on the premises inter alia that the liability of excise duty on the final product made out of scrap received under Chapter X at Nil excise duty and out of imported s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s furnished to the Department. 5. The Collector confirmed the demand for duty of Rs. 26,92,053.90 less Rs. 12,74,791.50 (on confirmation of debits made in RG 23A Part II and PLA during January 1987) and imposed a penalty of Rs. 5 lakhs applying the extended period of limitation and holding that vide Rule 57F(3) credits on inputs can be allowed towards payment of duty of excise on the final products in relation to the manufacture of which such inputs are intended to be used as per declaration filed under Rule 57G(1). Thus availing the procedure for payment of duty by debiting of the credits on the inputs has to be confirmed only in respect of the inputs and final products which are the subject matter of Rule 57G . Hence this appeal. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provides is that the credit of duty allowed in respect of any inputs may be utilised towards payment of duty on any of the final products in or in relation to the manufacture of which such inputs are intended to be used. This rule does not debar utilisation of excess (accumulated because of less duty on final products than on the inputs) for payment of duty on the same final products which are manufactured by non-duty paid inputs (whether procured under Chapter X procedure or otherwise exempt under any notification). Moreover, there is no one to one co-relation of inputs and final product under the MODVAT scheme for utilisation of credit. It has, therefore, been decided by the Board that the excess credit accumulated if any, can be utilis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) as above do not bar such utilisation when admittedly there is no one-to-one co-relation between the input and output under the Modvat scheme. Examining this issue, it is observed that what Rule 57F(3) provides is that the credit of duty allowed in respect of any input can be utilised towards payment of duty on any of the final product in or in relation to the manufacture of which such inputs are used. A plain reading of the Rule, when considered in the background of the objective of the Modvat Scheme, viz. to provide instant credit for the manufacturers and to avoid cascading effect of taxation on input in relation to the final product, it will be clear that the Rule in terms will not be a bar for utilisation of amount of credit which m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rap on which no countervailing duty is paid and consequently no MODVAT Credit of duty of such countervailing duty is taken by the appellant. Similarly, it also purchases scrap from Ordnance Factory (turning and boring scrap) without payment of duty in terms of an exemption Notification 55/86. 12. A plea was taken which is admittedly on record in the impugned order in the last para on page 2 and going over to page 3 that the appellant was not manufacturing the steel ingots exclusively out of imported scrap but from combination with other scrap available in the stock. This plea was repeated in the course of hearing by the learned consultant that every batch of steel ingots manufactured by the appellants contained duty paid inputs on which M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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