Custom, Excise & Service Tax Tribunal
M/S.B.D.A. Steels Pvt. Ltd vs Cce, Jalandhar on 4 July, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:17.02.2011
Date of decision:4.7.2011
Excise Appeal No.1233 of 2005
[Arising out of Order-in-Appeal No.119/CE/JAL/2004 dated 30.12.2004 passed by the Commissioner of Central Excise, Jalandhar].
M/s.B.D.A. Steels Pvt. Ltd. Appellant
Vs.
CCE, Jalandhar Respondent
For approval and signature:
Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see CESTAT (Procedure) Rules, 1982.
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
Appearance: Rep. by none for the appellants. Rep. by Shri B.K. Singh, Jt. CDR for the respondent.
CORAM: Honble Shri Justice R.M.S.Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical) Order No/Dated:
Per Rakesh Kumar The facts leading to this appeal are as under:-
1.1 The appellant are manufacturer of iron and steel products of Chapter 72 of the Central Excise Tariff. They availed Modvat credit of central excise duty paid on inputs in or in relation to the manufacture of their final products. The period of dispute in this case is from April, 1986 to August, 1986. One of their main input is iron and steel scrap and other inputs are Graphite Electrodes, Nipple Stopper Heads, Ramming Mix, Magnesite Refractory Cement and Mortar. When the Modvat scheme was introduced from March, 1986, the Central Government under 2nd Proviso to Rule 57 G(2) of the Central Excise Rules, 1944, issued an order dated 7.4.1986 ordering that certain goods mentioned in that order and which were received as inputs and were lying in stock on or after 1.3.1986 would be deemed to have suffered duty at the rate specified in that order and Cenvat credit of that duty would be available to the manufacturers without production of documents evidencing the payment of duty. However, one of the conditions for this deemed modvat credit was that the same would not be available if such inputs are clearly recognisable as non-duty paid or chargeable to nil rate of duty. 1.2 The department on scrutiny of the RT-12 Return filed by the appellant for May 1986 to September, 1986 period, was of the view that the appellant have wrongly taken the Modvat credit amounting to Rs.51,16,101/- , out of which Modvat credit of Rs.45,32,398/- pertained to iron and steel scrap (which was deemed modvat credit in terms of Governments order dated 7.4.1986),Modvat credit of Rs.5,09,062/- was in respect of Graphite Electrodes and credit of Rs.74,640/- was in respect of Ramming Mix Mortar. Sofar as the Modvat credit in respect of iron and steel scrap is concerned, the department was of the view that the same is not available to the appellant as the same is clearly recognisable as non-duty paid, for the reason that the same is exempt from duty under Notification No.208/83-CE. The department was also of the view that the Ramming Mix Mortar and Graphite Electrodes cannot be called input used in or in relation to the manufacture of the final products. It is in this background that a show cause notice dated 12.11.986 was issued to the appellant for recovery of Modvat credit of Rs.51,16,101.18. The show cause notice was adjudicated by the Commissioner vide Order-in-Original dated 6.11.2005 by which after discussing each of the issue in detail, the Commissioner held that so far as Graphite Electrodes and Ramming Mix Mortar are concerned, the Modvat credit is available and as regards, Deemed Modvat credit in respect of iron and steel scrap is concerned, while Modvat credit is available for the period till 28.08.1986, Deemed Modvat credit in respect of iron steel scrap would not be available in respect of the quantity which was received during the period w.e.f. 29.08.1986, as the Central Government vide order dated 29.08.1986 issued under Rule 57 G(2) had modified its earlier order dated 7.4.1986 and w.e.f. 29.08.1986 the facility of Deemed Modvat credit in respect of iron and steel scrap had been withdrawn. The Commissioner, therefore, confirmed the Cenvat credit demand of Rs.10,83,763/- in respect of the quantity held to have been received during the period from 29.08.1986 to 30.09.1986. Against this order of the Commissioner (Appeals), the present appeal has been filed.
2. None appeared for the appellant though a notice for hearing had been sent to them well in time and the same had been acknowledged. In view of this, sofar as the appellant are concerned, the matter, in accordance with Rule 21 of the CESTAT (Procedure) Rules, is being decided ex parte.
3. Heard Shri B.K. Singh, ld. Joint Chief Departmental Representative for the department, who defended the impugned order by reiterating the findings of the Commissioner and pleaded that the Commissioner has rightly denied the deemed credit of Rs.10,83,763/- as this credit is in respect of the quantity of iron and steel scrap which had been received on or after 29.08.1986 when Deemed modvat credit facility had been withdrawn by the Government.
4. We have carefully considered the submissions of the learned Jt. CDR and have perused the records. In terms of the order dated 7.4.1986 issued by the Central Government under 2nd Proviso to Rule 57 G of the Central Excise Rules, 1944, inputs specified in Col. (2) of the table annexed to this order and falling under Heading of the Central Excise Tariff specified in the corresponding entry in Col.3 of the said table, purchased from outside and lying in stock on or after 1.3.86 for the manufacture of the final products specified in Notification No.177/86-CE dated 1.3.1986 are be deemed to have paid duty specified in Col.4 of the said table and the credit of the specified duty at the rate specified in respect of such input used in the manufacture of such final product, on which duty of excise is leviable either in whole or in part may be allowed at the rate specified in Col.4 of the said Table without production of documents evidencing payment of duty. This order was subject to certain conditions and one of the conditions was that this deemed credit would not be available if such inputs are clearly recognisable as being non-duty paid or are chargeable to nil rate of duty. In this case, there is no dispute that the iron and steel scrap is covered by this deemed modvat credit order. Initially, the dispute was that the deemed credit is not available as the scrap is clearly recognisable as non-duty paid. But this issue has been decided by the Commissioner in the appellants favour and that portion of the order is not under challenge. The only dispute is as to whether this benefit would be available for the period from 29.08.1986 to 30.09.1986 which has been denied by the Commissioner on the ground that the deemed modvat credit would not be available for this period in view of the order dated 29.08.1986 of Government withdrawing the deemed credit facility. The appellants contention is that iron and steel scrap in respect of which modvat credit has been denied, had actually been received in their factory during the period prior to 29.08.1986 as is clear from the intimation regarding receipt of scrap given in D-3 format by them to the department at the time of each receipt and merely because the credit entries in the RG-23 Part-II Register were made on or after 29.08.1986, it cannot be concluded that the quantity had been received on or after 29.08.1986. The appellants plea is that all the receipts of the iron and steel scrap were upto 28.08.1986, as the entries in the RG-23A Par-I Register have been made upto this date only.
5. In terms of the order dated 7.4.1986 issued by the Government under 2nd Proviso to Rule 57 G(2), Deemed modvat credit in respect of the specified goods was available in respect of the goods lying in stock on or after 1.3.1986. Since the deemed modvat credit order dated 7.4.1986 was withdrawn in respect of iron and steel scrap with effect from 29.08.1986, the consignments of iron and steel scrap received upto 28.08.1986 would be eligible for deemed modvat credit irrespective of the date on which the entries were made in the RG-23A Part-II register, as the availability of deemed credit is linked with the quantity of the specified inputs lying in stock on or after 1.3.86 and upto 28.08.1986. The date of receipt of the consignment in the factory has to be determined with reference to the date on which the intimation regarding their receipt for D-3 Format to the department was made and the entries were made in the RG-23 A Part-I register. We also find that the Commissioner, in para 17 of the impugned order has given a finding following the Tribunals judgement in the case of Upper India Steel Manufacturing and Engineering Co. Ltd. reported in 1997 (96) ELT 306 (Tribunal) that the Deemed modvat credit in respect of iron and steel scrap was admissible to the appellant during the period from 7.4.1986 to 28.08.1986. In view of this, Modvat credit in respect of the scrap received during period upto 28.08.1986 cannot be denied even if the entries regarding its credit in the RG-23A Part-II Register were made after 28.08.1986. The Commissioners impugned order has not given any finding that the Movat credit of Rs.10,83,763/- which has been denied, was in respect of the quantity of scrap which had actually been received in the factory after 28.08.1986 or before 28.08.1986. In view of this, the matter has to be remanded to the adjudicating authority for specific finding as to whether the iron and steel scrap in respect of which Modvat credit has been denied, has actually been received in the factory prior to 29.08.1986, as evidenced by D-3 intimation and entries made in the RG-23A Part-I Register and other evidence, if any, regarding the actual date of receipt. If the receipt is during the period prior to 29.08.86, the deemed credit has to be allowed.
6. In view of the above discussion, the impugned order is set aside and the matter is remanded to the original adjudicating authority for de novo adjudication as per our directions above.
[Order pronounced in open court on 4.7.2011].
( Justice R.M.S. Khandeparkar ) President (Rakesh Kumar) Member (Technical) Ckp.
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