Customs, Excise and Gold Tribunal - Delhi
Cce vs Punjab Concast Steels Ltd. on 30 June, 1993
Equivalent citations: 1994(50)ECR268(TRI.-DELHI)
ORDER G.A. Brahma Deva, Member (J)
1. Appellants are engaged in the manufacture of Iron and Steel products/Oxygen falling under Chapter 72/28 of Central Excise Tariff Act, 1985. The case of the department is that the assessee has wrongly availed modvat credit on ferro therm/teaming compound and Acetylene gas. Accordingly, show cause notice was issued for disallowing the amount of Modvat credit on the above items and the same was confirmed by the Assistant Collector in the adjudication proceedings. In appeal, the Collector (Appeals) held that no credit is admissible on teaming compound/ferro therm but accepted the contention of the respondents that Modvat credit is admissible on Acetylene Gas following the ratio of the decision of the Tribunal in the case of Mukund Iron Steel Works Ltd v. Collector of Central Excise, . Further, she also held that the demand was barred by time since show cause notice was issued beyond the period of six months in the absence of suppression or mis-statement of facts. Aggrieved by this order, the Department has come up before us by way of this appeal.
2. It was contended by Shri Rakesh Bhatia, learned SDR that Rule 57-I was amended on 6.10.1988 by introducing limitation in the relevant rule and since demand-cum-show cause notice was issued on 1.7.1987 prior to 6.10.1988 and at that time no limitation under Rule 57-I was prescribed it was not proper for the Collector (Appeals) to hold that demand prior to 12.1987 was time barred.
3. On the other hand Shri Kulvinder Singh, learned Advocate for the respondents submitted that since no time limit was prescribed under Rule 57-I, the provisions of Section 11A and limitation provided therein would be clearly applicable to the proceedings as it was held by the Tribunal in the case of Premier Tyre Limited v. Collector of Central Excise, and in the case of Collector of Customs & Excise v. Jawandmal Dhannamal . He said that since issue is settled this appeal is liable to be dismissed.
4. We have carefully considered the pleas advanced on both sides. We agree with the earned Counsel for the respondents that this issue was considered and well settled. The relevant observations made by the Tribunal in the case of Jawandmal Dhannamal (supra) is reproduced as under:
It is true that there was no time limit prescribed in Rule 57-I of the Central Excise Rules, 1944. Even then, reversal of modvat credit amounts to demand for short levy or non-levy to the extent of ineligible modvat credit utilised towards duty on the final product Any demand for such short levy or non-levy has to be made within the parameters of Section 11-A, which cannot be said to be overruled by the Rules. Rules are to be read in conjunction with the provision of the Act even where specific limitation is not provided for in the Rules. Therefore, statutory provision cannot be ignored if while issuing a demand under Rule 57-I. Such a demand is required to be made by the proper officer as laid down in Section 11-A within the time limit prescribed therein.
We are not inclined to take a different view than the view taken by the Tribunal in the aforesaid decision Concurring with the view that Rule 57-I cannot override the provisions of Section 11A prior to amendment, time limit prescribed under Section 11A of the Act would be applicable, we do not find any merits in the appeal filed by the Department. Accordingly, the appeal is dismissed.
S.K. Bhatnagar, Vice-President
1. With due respects to Hon'ble Member (J) my views and orders in the matter are as follows:
2. I observe that as per the show cause notice, dated 1.8.1988, the appellants were charged with wrongly availing Modvat credit on Ferro therm/Teaming Compound to Acetylene Gas on the ground that both these items could not be considered as inputs under Rule 57A read with Notification No. 177/86-CE, dated 1.3.1986.
3. The Assistant Collector confirmed the department's view points and disallowed the credit availed of and directed the appellants to reverse the entry in respect of both the items.
4. The learned Collector (Appeals) however upheld the Department's view point only in respect of the first item namely the Ferro therm/Teaming Compound but considered the credit admissible on merits in case of Acetylene Gas. She, however, further held the demand to be time barred for the period prior to 1.2.1977 and allowed the appeal partly.
5. The Department has come up in appeal to the Tribunal against this order on two grounds--one that Rule 57-I was amended by Notification No. 28/88-CE, dated 6.10.1988 and by this amendment, the condition regarding the limitation was introduced in Rule 57-I since the demand show cause notice was issued on 1.7.1987 and at that time no limitation was prescribed under Rule 57-I, it was not proper to hold the demand prior to 1.2.1987 as time barred. The second ground arises out of the Department's contention in the Appeal Memorandum that the Modvat credit was not admissible in respect of both the items mentioned in the Assistant Collector's order.
6. According to the Department, the Ferro Therm/Teaming Compound is used in the ingot mould to coat the surface of the ingot mould for getting better surface of the steel ingot whereas the Acetylene Gas is used for cutting the billets to the required size. Thus, MODVAT credit is not admissible on both these items according to the Department.
7. The respondents have filed a Cross-Objection in which they nave relied on the Tribunal's order in the case of Premier Tyres limited, in support of their contention that time limit was governed by the provisions of Section HA even in MODVAT cases.
8. During the course of hearing, the learned Departmental Representative referred to the documents filed with the Memorandum of Appeal and reiterated the Department's view points. He emphasized in the main that the demand was not time barred. The respondents had, on the other hand, referred to their reply to the show cause notice and emphasized mainly the aspect of time bar.
9. I observe that in so far as Acetylene Gas is concerned, the Collector (Appeals) has considered it as an input and rightly so in view of the use to which it is put in relation to the manufacture or the final products; and she has rightly relied on the Tribunal's order in the case of Mukund Iron and Steel Works Ltd. in this connection.
10. However, in so far as the item Ferro Therm/Teaming Compound is concerned, she has erred inasmuch as the technical write-up portion incorporated in the respondents' reply to the show cause notice has not been contradicted or shown to be wrong by the Department at any stage. On the contrary, the Department itself has admitted its use in relation to the manufacture to the extent of its utilisation at the ingot mould stage to coat the surface of the ingot mould for getting better surface of the steel ingot. In other words, while the respondents' submissions to the effect that (1) the function of the Teaming Compound is to protect the steel ingot from de-oxidation and help in refining. (2) If it is not used in proper proportion there is every danger of the ingot getting struck in the ingot moulds haw not been contradicted or shown to be wrong their contention that Teaming Compound also helps in producing better surface of steel stands admitted
11. Both sides have not produced any technical literature. However, the respondents had incorporated these points in the reply to the show cause notice itself, but neither the Assistant Collector nor the Collector (Appeals) had properly dealt with them. It is also not clear on what basis the learned Collector (Appeals) has observed that this compound is in the nature of a structural material; even the Department has not described it as a structural material at any stage in the appeal memorandum or otherwise. Further merely because it is used in the ingot moulds, it could not be said that it was not an input. The reliance on the case of Mukund Iron & Steel Works (supra) in this respect, therefore, appears to be mis-placed.
12. In fact, I consider that in view of the use of Ferro Therm/Teaming Compound indicated by the appellant which has remained uncontradicted and indeed partly admitted, it was obviously an input used in relation to the manufacture of steel ingots.
13. From the above position, it is evident that MODVAT credit was admissible in respect of both the items in question and had been rightly availed of.
14. In these circumstances, the question of time bar becomes merely academic and it is not necessary to pronounce thereupon.
15. There is no merit in the appeal. It is accordingly dismissed