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TMI Blog2002 (3) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... total credit of Rs. 3,41,007.52, a credit of Rs. 1,23,061/- was denied on certain capital goods which the assessee had received in their factory during August, 1997. In so denying the credit, the Commissioner recorded a finding that the appellants were working under the Compounded Levy Scheme under Section 3A of the Central Excise Act during the material period and hence not entitled to capital goods credit. The rest of the Modvat credit was denied on inputs on one or the other ground. A credit of Rs. 42,901/- taken on Boric Acid was denied on the ground that this item was not an eligible input under Rule 57A. Another credit of Rs. 1,62,236/- taken on HR Sheets was also disallowed on similar grounds. A credit of Rs. 8,666/- which was taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the manufacture of ingots of non-alloy steel falling under Chapter sub-heading 7206.90 of the Schedule to the Central Excise Tariff Act and the said goods were specified final products under Rule 57Q by virtue of Clause (iii) in column 3 against Sr. No. (1) of the Table annexed to sub-rule (1) of the rule. The appellants had paid duty on their product during the said period under Section 3 and not under Section 3A of the Central Excise Act as they were not covered under the Compounded Levy Scheme of the latter Section. At no point of time had the Commissioner determined the annual capacity of production (ACP) of the appellants under Section 3A. The appellants had paid duty on their product only in terms of Section 3 of the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvat credit of Rs. 1,23,061/- taken on capital goods during August, 1997 on the basis of the finding (recorded by the Commissioner) that the appellants were working under the Compounded Levy Scheme under Section 3A is not sustainable in law. 4.2 As regards the credit taken on Boric Acid, Counsel gives an account of its use and submits that the chemical is liable to be held to be an eligible input under Rule 57A. As regards the credit of Rs. 8,666/-, ld. Counsel submits that, during the material period, it was the practice of HPCL to supply their goods from their depots (registered with the Central Excise department) under cover of delivery challans and issue proper invoices as required under Rule 52A only later on. It was in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el. If a manufacturer of MS Ingots was covered under the Compounded Levy Scheme under Section 3A, he could not have paid duty on his product without the knowledge of the jurisdictional Commissioner of Central Excise and without there being prior determination of ACP by the Commissioner. That is not the case here. The Commissioner has not claimed to have determined the ACP of the appellants, nor is there any evidence, on record, of any duty having been paid in accordance with the provisions of Rule 96ZO read with Section 3A. It is not in dispute that the Compounded Levy Scheme in respect of manufacturers of MS Ingots had effectively come into force only on 1-9-97 under Notification No. 43/97-C.E. (N.T.) read with Notification No. 30/97-C.E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit of Rs. 42,901/- taken on Boric Acid requires to be allowed to the assessee under Rule 57A. It has been pleaded by the Counsel for the appellants that the HR sheets, on which a credit of Rs. 1,62,236/- was denied by the Commissioner, were used inside the induction furnace for the purpose of fortifying its inner lining and, further, that, after a month or so, the sheet would begin to melt and would ultimately become part of the final product. It appears from this transition of HR Sheets (which, again, has not been rebutted in the impugned order) that the sheets were a consumable item used in relation to the process of manufacture of MS Ingots in the induction furnace. The credit taken on the item is held to be admissible under Rule 57A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure of law laid down under Rule 57E, on the ground that the Pig Iron manufacturers ought not to have paid duty at the higher rate of Rs. 600 PMT as passed on to the assessee. It was open to the department to initiate proceedings for recovery of any excess credit under Rule 57E. That was not done. None of the show cause notices is found to have invoked this provision of law. The credit of Rs. 4,143/-, therefore, cannot be denied to the assessee. 7. A penalty of Rs. 15,000/- has been imposed on the assessee under Rule 173Q. I have already allowed the bulk of the Modvat credits in question. Out of the credit of Rs. 3.41 lakhs, only a credit of Rs. 8,666/- has been held to be inadmissible. In the circumstances, I do not find it reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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