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TMI Blog1997 (4) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of receiving input material under cover of duty paying documents in respect of certain specified goods in the Notification but the order says that such deemed credit cannot be taken where the article is clearly recognisable as non-duty paid or is subject to nil rate of duty under the Tariff. The Additional Collector of Central Excise initiated proceedings against the Respondents by issue of Five Show Cause Notices between 1-1-1992 and 30-6-1993 for the period between June 1991 to June 1993. The charge was that the material on which Respondents had taken deemed Modvat credit was in the nature of Bazar scrap on which no duty has been paid therefore, they are recognisable as non-duty paid leading to denial of deemed Modvat credit. The Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hine Builders v. Collector of Central Excise, reported in 1996 (83) E.L.T. 576 (Tribunal) that the material should be regarded as clearly recognisable as non- duty paid. Therefore, the denial of deemed Modvat credit in this case is justified. 3. Shri B. N. Rangwani the ld. Consultant for the Respondents relied upon the Tribunal decision in the case of Kanungo Alloys Pvt. Ltd. v. Commissioner of Central Excise, Jaipur reported in 1996 (16) RLT 777 (CEGAT-NB) to say that the Department has to prove that the scrap is clearly recognisable as non-duty paid and in this case the ld. Consultant pointed out that the invoices and the bills under which they have received the material is with the Department, and they can do the varification befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of any lead or lead articles. In other words, the dealers are the suppliers of such waste and scrap to the assessee and they are not manufacturer of lead scrap of lead articles neither they in turn or directly purchasing it from the organised sector or tiny sector who are manufacturing lead items. Obviously, such waste and scrap has not been generated in the process of manufacture of lead ingots or lead articles. Rather it is an admitted fact that such waste and scrap are Bazar scrap and have been collected from hawkers as "Bhangar" and it consists of old and used or weared and teared articles of lead which has out lived its utility. Such scrap have arisen out of old and used machinery, lead storage batteries, lead insulators, X'ray equip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit. The deeming provisions in the order under Rule 57G(2) to deem the materials as duty paid is issued and the intention, the Larger Bench held, is not to deem that inputs which actually did not suffer duty are inputs which suffered duty. The Larger Bench further observed that if duty need not be paid and has not been paid, the question of duty paid being earned as credit does not arise. Applying the ratio of the Larger Bench decision to the facts of the case as noted above the material received by the Respondents are Bazar scrap being broken and worn out articles which could not have suffered duty; they are not in the nature of clearances of scrap by a manufacturer of lead articles, the scrap arising in the course of manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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