Customs, Excise and Gold Tribunal - Tamil Nadu
Arun Steel Industries vs Cce on 10 March, 1995
Equivalent citations: 1995(59)ECR508(TRI.-CHENNAI)
ORDER
S. Kalyanam, Vice-President
1. This appeal is directed against the order of the Collector of Central Excise, Madras, dated 17.4.1989 confirming the order of the Asstt. Collector of Central Excise, Madras, dated 27.10.1988 and directing the appellants to reverse the deemed MODVAT credit taken by them for re rollable materials and ingots for the period from 20.10.1987 to 22.4.1988.
2. Sh. Vijayaraghavan, the learned Consultant submitted that the Central Board of Excise & Customs has issued statutory instructions for availing deemed credit in terms of Rule 57G(2) of the Central Excise Rules in respect of materials such as iron steel, copper, aluminium, waste, etc. Since the statutory order issued by the Board did not specifically cover re-rollable materials and ingots, on the basis of a representation made by the people manufacturing goods out of re-rollable materials and ingots, the Board on 20.10.1987 issued a statutory order No. 332/30/87-TRU under Rule 57G(2) of the Central Excise Rules, 1987. This order of 20.10.1987 was superseded by a statutory order of 1.3.1989 by order No. 341/1/88-TRU and before it has actually superseded the earlier order giving deemed credit in respect of re-rollable materials and ingots applicable to the appellants covering the period concerned in the present appeal was in force. The learned Consultant further submitted that this aspect of the matter has not been borne in mind or considered by the original authority. After the impugned order was passed, the appellants herein challenged the sustainability of the same by way of writ in the High Court of Madras in WP Nos. 7605, 7614. 8243 and 8917/89 and the writ was disposed of on 7.2.1992 directing the appellant to file appeals before the Tribunal, granting waiver of pre-deposit. Accordingly, the appellant has come before this Tribunal.
3. Sh. Vijayaraghavan, the learned Consultant submitted that the learned Collector (Appeals) has mis-directed himself that the statutory rule referred to above dated 20.10.1987 cannot be considered to be a rule issued under Rule 57G(2) as it did not relate to the inputs but only to the manufacturers and assailed the correctness of this reasoning. The learned Consultant further submitted that the Collector (Appeals) had also exceeded his jurisdiction in declaring the rule issued by the Government in exercise of a statutory order as one with-out authority. It was submitted that in respect of statutory rule issued under Rule 57G(2) in respect of materials other than re-rollable materials and ingots are governed by the statutory orders dated 7.4.1986 which was superseded by another order dated 2.11.1987 and the authorities below would appear to have mis-directed themselves by ignoring the specific statutory order in favour of the appellant for the inputs in question referred to supra. He also explained that it is a common knowledge that re-rollable material is different from normal scrap. The learned Consultant prayed that the impugned order may be set aside and appeal allowed.
4. Sh. Venkatan, the learned DR submitted that in view of the fact that a number of statutory orders have been issued on deemed credit, it is but proper that the order referable and relatable to the inputs in question in the appeal should be specifically considered and a detailed finding given.
5. We have considered the pleas made before us. We have catalogued the number of orders issued by the Government under Rule 57G(2) of the Central Excise Rules, 1987 in respect of iron, steel, copper, aluminium, waste, scraps, ingots, etc. We prima facie find considerable force in the plea of the learned Consultant in regard to order dated 20.10.1987 relating to relatable materials which reads as under:
I am directed to inform you that representations have been received from some of the re-rolling units manufacturing goods falling under Chapter 72 or 73 of the Central Excise Tariff and paying an effective rate of duty of Rs. 500 per metric tonne that they are not able to avail of the Modvat credit facility under Rule 57A of the Central Excise Rules because of their inability to produce duty-paying documents in respect of ingots and other re-rollable materials used by them as inputs.
2. The representations have since been examined.
3. The Government, having regard to various factors including (i) fixation of a uniform rate of excise duty of Rs. 365 per tonne on ingots both in respect of the mini steel plants well as integrated steel plants with effect from 1.3.1987 and (ii) prescribing of an excise duty of Rs. 365 per tonne on goods and materials of iron or steel obtained by breaking up ships, boats and other floating structures with effect from 27.3.1987, hereby issues the following directions under the second proviso to Rule 57G(2) of the Central Excise Rules, 1987:
Ingots, and re-rollable materials of iron or steel purchased from outside on or after 1.4.1987, may be deemed to have paid duty at the rate of Rs. 365 per tonne, and credit of duty in respect of such ingots and re-rollable materials used, without undergoing the process of melting in the manufacture of goods falling under Chapter 72 or 73 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), may be allowed at the rate of Rs. 365 per tonne, without production of documents evidencing the payment of duty.
4. It is, therefore, requested that credit of duty Rule 57A of the Central Excise Rules, 1944 may be granted in terms of the directions given above to re-rollers.
Departmental Clarification:
Ingots and re-rollable materials of iron or steel purchased from outside and lying in stock on or after 1.6.1989 with the Re-rollers may be deemed to have paid duty at the rate of Rs. 500 per tonne, and the credit of duty under Rule 57A of the said rules in respect of such ingots and re-rollable materials used, without undergoing the process of melting, in the manufacture of goods falling under Chapter 72 or 73, may be allowed at the rate of Rs. 500 per tonne, without production of documents evidencing the payment of duty.
[MF (DR) F. No. 342/1/88-TRU, dated 1.6.1989] Case Law:
The order dated 20.10.1987 clearly covers the period from 1.4.1987 to 30.8.1987 in respect of inputs which were consumed by the assesses and the assessees would become entitled to take deemed Modvat credit for the same. This statutory direction is operative retrospectively with effect from 1.4.1987 in respect of the inputs under consideration (re-rollable waste and scrap of iron and steel), and this statutory direction was withdrawn with effect from 2.11.1987. The Chandigarh Collectorate has also published a Trade Notice No. 43/87, dated 30.10.1987 to the effect that with effect from 1.4.1987, ingots and re-rollable materials of iron or steel purchased from outside may be deemed to have paid duty at Rs. 365 per tonne and credit of duty in respect of ingots and re-rollable materials used is allowed without production of documents evidencing the payment of duty.
This has got to be separately and independently construed and considered with reference to the inputs with which we are concerned in the appeal, since the other orders do not specifically give deemed credit to the re-rollers and ingots. It would be seen that the superseding orders dated 29.8.1986 and 2.11.1987 should be considered alongwith the other orders referred to above and a de-tailed finding given with reference to the appellants case and the appellants eligibility to take deemed credit in respect of re-rollers and ingots. Since this exercise has not been done, we have no other alternative except to set aside the impugned order and remand the matter to the original authority for reconsideration of the issue afresh and in accordance with law after giving the appellants a opportunity of being heard. We order accordingly.
(Pronounced in open Court)