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TMI Blog1993 (9) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... hich they declared inputs namely cast iron duplex, ferro manganese, ferro silicon, M.S. Scrap and Iron scrap to be used in the manufacture of their said final products for availing the benefit of modvat credit. Alongwith the said declaration they also furnished a statement of balance stock of the inputs lying with them as on 28-2-1986 and inputs received thereafter till 10-4-1986 and requested the Assistant Collector to allow the credit of excise duty already suffered on such inputs in terms of Rule 57H. The Superintendent (Tech.), Central Excise by his letter dated 2-6-1986 required the appellants to submit copies of bills etc. relating to the stock in question and on which Modvat credit was desired to be taken. The appellants vide their letter dated 22-7-1986 informed the Superintendent that M.S. scrap used as inputs was purchased by them from dealers in open market and enclosed the copies of the relevant purchase invoices. The Range Inspector in his letter dated 18-9-1986 required the appellants to submit the relevant original documents with copies of bills/GP 1s for the month of April and May 1986. He, however, pointed out that Modvat credit would be allowed only on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar was also taken by the appellants. The Assistant Collector by order dated 22-8-1988 disallowed the entire Modvat credit. The Collector (Appeals) rejected the appeal solely on the ground that prior permission of the Assistant Collector was not obtained. Hence this appeal. 5. Steel scrap lying with the appellants as on 1-3-1986 and thereafter purchased from the market has been treated as charged to nil rate of duty as it is exempt from payment of duty in terms of provisions of Notification No. 55/86 dated 10-2-1986 and Notification No. 69/87 dated 1-3-1987. Therefore, the adjudicating authority has disallowed the benefit of deemed Modvat credit on steel scrap in terms of proviso 2(ii) of the Government of India Order dated 7-4-1986. The Tribunal had occasion to consider whether goods exempt from payment of duty under an exemption Notification can be considered as non-duty paid or charged to nil rate of duty, in the case of Arun Auto Spring Manufacturing Co. v. C.C.E. - 1990 (49) E.L.T. 284. The goods in that case were exempt under Notification 208/83. The Tribunal held that the goods exempt from payment of duty under an exemption notification cannot be construed as non-duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement or suppression justifying the extended period of limitation being invoked. However, the assessee has admitted in reply to the show cause notice that assessment of monthly RT 12 returns has been done provisionally. As the RT 12 returns are not before us, we are not able to come to any conclusion as to how the Modvat credit was disallowed, whether on RT 12 returns by the Superintendent or by separate order. 7. The appellants contend that, even assuming that the assessment is provisional, still that would not make any difference to the case as the Superintendent is not the appropriate authority to disallow Modvat credit. In the case of Indian Textile Engineers v. C.C.E. - 1989 (43) E.L.T. 130, the Tribunal has held that it is the Assistant Collector who is the appropriate authority in the matter of disallowance of Modvat and not the Range Superintendent. Hence the endorsement on assessment memorandum i.e. RT 12s without the support of an order by the Assistant Collector after compliance of procedural aspects is prima facie bad in law. 8. The learned SDR contends that two of the inputs i.e. Ferro Manganese and Ferro Silicon fall under Heading No. 72.02 which is not covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow it for a substantive benefit should not be disallowed for minor procedural infractions, if any. 14. The learned Collector (Appeals) has therefore, erred in rejecting the appeal merely on this score. 15. In so far as items other than the steel scrap is concerned, I find no specific finding has been recorded one way or the other by the Collector (Appeals), who has erred in presuming that the case relates only to the question of Modvat on steel scrap lying in stock on 28-2-1986. 16. So far as the question of items themselves is concerned, in this respect, I find that (again) there are two types of situations which emerge from the submissions before us - (1) in respect of goods said to be purchased from open market and regarding which deemed credit facility is said to have been claimed and (2) goods received on payment of central excise duty from Bharat Heavy Electricals. 17. In respect of the deemed credit issue, it has already been held by the Tribunal in a series of cases that goods purchased from open market are deemed to be duty paid unless proved otherwise. Furthermore, in respect of goods cleared under conditional notification also, the burden of proving that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President Sd/- Sd/- (Jyoti Balasundaram)] (S.K. Bhatnagar) Member (J) Vice President The point of difference is referred to Shri K.S. Venkataramani, Member (Technical). Sd/- (Harish Chander) Dated : 18-5-1993 President 22. [Order per : K.S. Venkataramani, Member (T), Third Member on Reference, agreeing with Member (J)]. - Learned Counsel Shri J.S. Agarwal addressed arguments on the point of difference of opinion between the Honourable Member (Judicial) and the Vice President. It was submitted that there is no dispute about the fact that the materials in question are in fact inputs for the final product manufactured by the appellants. It was urged that Para-IV of the Vice-President s order gives a clear finding that the Department had no justification for denying the transitional facility under Rule 57H of the Central Excise Rules in the facts of this case. This finding effectively overrules that of the Collector (Appeals) on this issue in the impugned order. The learned Counsel further submitted that in the order of the Member (J), the aspect of limitation is covered in their favour and it also gives a finding that MODVAT credit cannot be disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking MODVAT credit lying in stock immediately prior to filing of MODVAT declaration as provided under Rule 57H Central Excise Rules without obtaining prior permission from the competent authority. A perusal of the orders proposed by the Hon ble Member (Judicial) and Hon ble Vice-President shows that both of them have found that for the purposes of availing deemed credit under Government of India order dated 7-4-1986 issued under Rule 57G Central Excise Rules the inputs purchased from the market should be considered duty paid, and both of them have further found that goods exempt from duty cannot be held to be non-duty paid or as being charged to Nil rate of duty. The observations of the Tribunal in this context in the case of Arun Auto Spinning Manufacturing Co. v. Collector of Central Excise Customs - 1990 (48) E.L.T. 543 are as follows : The words `charged to nil rate of duty appear to have a special significance. Section 3 of the Central Excises Salt Act is the charging section. Thereunder, it is laid down that duty of such excise on all excisable goods shall be levied and collected at the rates set forth in the First Schedule. Hence, levy and collection on excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not the Department s case that any such other conditions under the Rule are not satisfied, nor has the Department denied that the materials declared are not inputs for the final product manufactured by the appellants. Therefore, it has to be held, on the facts and in the circumstances of this case, that there has been substantial compliance by the appellants with the provision of that Rule and it will be unreasonable to deny the facility envisaged under that Rule to them. In the view taken as above in respect of the charges against the appellants, it will be more appropriate to conclude that the appellants would be entitled to MODVAT credit on the inputs covered by the deemed credit order of Government of India dated 7-4-1986. In the result, the order proposed by the Hon ble Member (Judicial) is concurred with. Sd/- (K.S. Venkataramani) Dated : 16-8-1993 Member (T) FINAL ORDER In view of the majority opinion, Appeal No. E/1692/89-NRB and E/Co/420/89-NRB, the appeal is allowed with consequential relief if any due. Sd/- Sd/- (S.K. Bhatnagar) (Jyoti Balasundaram) Dated : 1-9-1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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