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TMI Blog1994 (7) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... Jan. 92 Dec. 92 1436/93 2537/93 26-3-1993 Rs. 42,376/- Rs. 5,000/- Sept. 92 Jan. 93 1437/93 2538/93 26-3-1993 Rs. 39,990.56 Rs. 5,000/- March 92 Aug. 92 1438/93 2539/93 23-4-1993 Rs.11,863.1 Nil Jan. 92 Dec. 92 1439/93 2540/93 26-3-1993 Rs.1,64,647.18 Rs. 15,000/- March 92 Aug. 92 2. We have heard Shri V. Sridharan, learned Counsel for the applicants and Shri V.C. Bhartiya, learned DR for the Revenue. 3. The issue relates to deemed Modvat Credit on waste and scrap of aluminium purchased by the applicants who are manufacturers of Electric fans from the open Market. The Assistant Collector as well as the Collector (Appeals), as per the respective orders, held that deemed Modvat credit is not available to the applicants in terms of the Deemed Credit Order No. 342/1/88-TRU, dated 12-7-1990 (issued under Second proviso to Rule 57G(2) on the ground that scrap purchased from the open market comprised mainly of used broken parts of aluminium utensils, machinery and motor parts etc. which were not obtained as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department appears to have woken up and so to say to this responsibility and is coming up with its own pleadings in order to show the discharge of burden. Hence all the cases cannot be considered as identical or similar and have to be distinguished on facts. 8. In the case of scrap also it is required to be noted that there is various types of scrap such as virgin scrap and other scrap and in view of various exemption Notifications all the goods in the market need not necessarily be duty paid one. Therefore if in a particular case, the Department was able to discharge its initial onus. The burden will shift to the other side. Hence, he merely citing other cases does not help unless it could be shown that particular case was identical and on all fours with the present one. 9. In this case, the Department has claimed that this scrap included aluminium utensils which was exempt from duty under Notification Nos. 172/84 and 182/84 and also cited Trade Notice No. 27/92 of Allahabad Collectorate. Whereas appellants have not been able to show anything to the contrary hence it cannot be said at this stage that the input was clearly recognisable as non-duty paid and the matter could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased from the market and did not fall in the category of goods which are clearly recognisable as non-duty paid. In support of his contention, he cited and relied upon the judgment of the Hon ble Bombay High Court in the case of Vapsons Products, Bombay v. UOI. In this case, the Hon ble Calcutta High Court agreed with the decision of the Hon ble Calcutta High Court. Hon ble Calcutta High Court duly approved the Tribunal s decision in the case of Calcutta Paper Mills v. CEGAT. The relevant paragraph of the above judgment is reproduced below : 4. In my judgment, the orders passed by the two authorities below are clearly unsustainable. It is undoubtedly true that the burden to establish that the advantage of the exemption notification is available is on petitioners, but it is impossible to conclude that the petitioners have not discharged the burden successfully. The petitioners have purchased the base dyes from the open market and the petitioners are perfectly justified in claiming that excise duty has been paid on the goods available in the market. Rule 9(1) of the Central Excise Rules, inter alia, prescribes that the goods shall not be cleared from the factory gate until the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence was produced by the department in support of the contention that the goods which were purchased by the applicants from the market did not suffer duty at the time when such goods were removed by the manufacturer from the concerned factory. Submitting that the Tribunal in a number of cases has held that the onus of proving that the goods were clearly recognisable as non-duty paid squarely lies on the department, the ld. Counsel also referred to the case of Arun Auto Spring and Manufacturing Co. v. CCE reported in 1990 (49) E.L.T. 284 wherein the Tribunal had gone a step further and held as under :- 10. The aforesaid arguments further narrow down the area of interpretation with regard to the following provisions in the order :- If such inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty. It is not the case of the department that the goods have been removed from Excise or Customs area without payment of duty and hence they are to be construed as non-duty paid. The department states that the goods have been supplied by a manufacturer, who is entitled to avail of the exemption legally extended under Notification No. 208/83. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar circumstances and submitted that all the stay applications fall in the same category. Referring to the orders of the Hon ble Vice President, the ld. Counsel submitted that there is no dispute that all the scrap under consideration in the present applications was market scrap and was neither virgin scrap nor the scrap cleared from a factory. 16. Shri V.C. Bhartiya, the ld. JDR reiterating his arguments already submitted before the Bench emphasised that modvat credit is a facility given to the trade to remove the cascading effect of multi-point tax stating further that the scrap consisted of old and used items and therefore the question of payment of duty did not arise. 17. On careful consideration of the submissions made by both the sides and the case law cited and relied upon by the ld. Counsel for the applicants, I find that there is preponderance of judicial pronouncements wherein the non-duty paid character of the goods available in the market has been examined and commented upon in great detail. I do not see any reason to disagree with the ratio of the judgments cited and relied upon by the Counsel of the applicants. 18. Having regard to all the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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