Customs, Excise and Gold Tribunal - Delhi
Collector Of C.E. vs Kapsons Electro Stampings on 30 June, 1988
Equivalent citations: 1989(22)ECC233, 1988(18)ECR66(TRI.-DELHI), 1988(37)ELT323(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Since a common question is involved in all the three appeals, a common order is being passed.
2. Short question involved in these appeals is whether the MODVAT credit taken by the respondents herein in terms of Government of India's order F.No. B-22/5/86-TRU, dt. 7.4.1986 on steel sheets purchased from the open market from dealers of iron and steel products is permissible or not. The department contends, as a common ground of appeal, that the said deemed credit taken by the respondents herein is not admissible because the M.S. sheets are wholly exempted from duty under Notification 208/83, dated 1.8.1983 (as amended) and therefore, such M.S. sheets on which deemed credit has been taken by the respondents are clearly recognisable as non-duty paid and hence in terms of proviso (ii) to para 2 of Government of India's aforesaid order dated 7.4.1986 would apply making the credit Inadmissible.
The respondent company, on the other hand, contends inter alia, that the Notification 208/83, dated 1.8.1983 (as amended) does not give unconditional exemption, inter alia, to M.S. sheets. Before the sheets can be taken as wholly exempted under the said notification either of the two conditions have to be satisfied. Those conditions are as follows :-
(I) Final products (namely M.S. Sheets herein) are made from inputs described in col. 2 of the table to the notification are already duty paid under the Central Excises and Salt Act or had paid the additional duty of Customs under the Customs Tariff Act, 1975; or (II) No credit of duty paid on the inputs from which the final product (namely M.S. sheets herein) had been taken under Rule 56A of the Central Excises Rules.
The department has not adduced, according to the respondents, any evidence that any of the above two conditions has been fulfilled in respect of the Inputs out of which M.S. sheets have been manufactured and in respect of which the deemed credit has been taken by them. A dealer in iron and steel products gets the goods from various sources and it is not possible to distinguish about the source of manufacture of the M.S. sheets. The sheets might have come to the dealer from the primary (ore-based) manufacturer of iron and steel products or it may be from a secondary manufacturer of iron and steel products. It is only in case of secondary manufacturer of M.S. sheets that it may be possible to say that the inputs might be duty paid. Department has produced no evidence regarding the identity of M.S. sheets purchased by the respondents from the iron and steel products dealers from the market. Government of India's order dated 7.4.1986, according to the respondents, permitting deemed credit on M.S. sheets is unambiguous and it is for the department to prove by adducing sufficient evidence that the sheets purchased from the market are clearly recognisable as non-duty paid. The department's contention, according to the respondents that the onus to prove that the M.S. sheets are duty paid Shifts on the assessee is not tenable.
3. In order to appreciate the foregoing controversy it is appropriate to set out the provisions of the relevant rules, Government of India's order and the Notification 208/83, dated 1.8.1983.
4. Rule 57-G laysdown the procedure to be observed by a manufacturer for taking credit of duty paid on specified inputs and utilised for manufacture of specified final products. One of the essential parts of the procedure is that the manufacturer has to produce either a gate pass, an A.R.I or a bill of entry evidencing the payment of duty on such input. However, this essential condition is waived in terms of 2nd proviso to Sub-rule (2) of Rule 57-G which is as follows :-
"Provided further that having regard to the period that has elapsed since the duty of excise was imposed on any inputs, the position of demand and, supply of the said inputs in the country and any other relevant considerations, the Central Government may direct that with effect from a specified date, all stocks of the said inputs in the country, except such stocks lying in a factory customs area [as defined in the Customs Act, 1962 (52 of 1962)] of a warehouse as are clearly recognisable as being non-duty paid, may be deemed to be duty-paid and credit of duty in respect of the said inputs may be allowed at such rate and subject to such conditions as the Central Government may direct, without production of documents evidencing the payment of duty."
In terms of the above proviso to Rule 57G(2) Central Government issued a direction in the following terms :-
"Steel sheets of thickness not exceeding 5 mm and falling under Heading No. 72.12 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), purchased from outside and lying in stock on or after 1.6.1986 with the manufacturers manufacturing the final products specified in the Notification No. 177/86-C.E., dated 1.3.1986 may be deemed to have paid the specified duty at the rate of Rs. 500/-(Rupees Five Hundred only) per tonne and a credit of the specified duty in respect of such sheets used in the manufacture of the said final products on which the duty of excise is leviable dither in whole or in part, may be allowed at the rate of Rs. 500/- per tonne without production of documents evidencing payment of duty. No such credit shall, however, be allowed,
(i) if in respect of any inputs the credit of specified duty thereon has already been availed of under any rule or notification granting such credit;
(ii) if such inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty; or
(iii) if in respect of any inputs where the reduction of duty as provided under the proviso to Notification No. 55/86-C.E., dated the 10th February, 1986, is claimed on the ground that the inputs have been manufactured with the aid of electric furnace and documentary evidence exists to show that the reduced duty has been paid on such inputs. In such cases actual duty paid should be allowed."
Notification 208/83, dated 1.8.1983 (as amended) exempts certain products falling, inter alia, under Chapter 72 of the Central Excise Tariff from the whole of duty of excise leviable under Section 3 of the Central Excises and Salt Act, 1944 subject to the following conditions :-
"Provided that such final products are made from any goods of the description specified in the corresponding entry in column (2) of the said Table (such goods being hereinafter referred to as "inputs") and falling under either of the said Chapters on which the duty of excise leviable under the said Section 3, or the additional duty leviable under the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has already been paid :
Provided further that no credit of the duty paid on the inputs has been taken under Rule 56A or 57A of the Central Excise Rules, 1944."
5. The sole ground of the appellant-Collector for denying the deemed credit In terms of Govt. of India's direction dated 7.4.1986 as set out above, is that the M.S. sheets are wholly exempted in terms of the aforesaid Notification 208/83 and therefore, these goods are clearly recognisable as non-duty paid and hence in terms of clause (ii) of the direction as set out above, no such credit can be taken by the respondents herein.
I am unable to accept this plea of the appellant-Collector as rightly contended by the respondents' learned consultant. M.S. sheets are exempted from the whole of the duty of excise in terms of the aforesaid Notification 208/83 only if the inputs (for sheets) falling under the same Chapter 72 have already paid duty or no credit of duty has already been taken on the inputs either under Rule 56A or under Rule 57A as the case may be. The department has failed to produce any evidence to the effect that the aforesaid conditions are satisfied in the case of M.S. sheets purchased by the respondents from the open market. It cannot, therefore, be held that the M.S. sheets purchased by the respondents from the dealers in the open market are fully exempted from duty. The direction dated 7.4.1986 of the Government, as set out hereinbefore clearly entitles the manufacturer purchasing the steel sheets of thickness not exceeding 5 mm to take the credit at the rate of Rs. 500/- per tonne without production of documents evidencing payment of duty. If the department contends that clause (ii) namely, "if such inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty" is applicable to these inputs (M.S. sheets) it is for department to produce sufficient evidence in support of their contention. The department has produced no evidence whatsoever that the M.S. sheets purchased by the respondents are non-duty paid or have been charged to nil rate of duty. They merely rely on Notification 208/83. This notification obviously cannot help the department because the notification gives full exemption only if the conditions spelt therein are satisfied. As already mentioned, department has not produced evidence to that effect as well that the conditions of the Notification 208/83 (as amended) have been satisfied in respect of the M.S. sheets purchased by the manufacturers from the open market proving thereby that such M.S. sheets are either clearly non-duty paid or charged to nil rate of duty.
6. In view of the foregoing discussion, I do not see any merit in the three appeals. Therefore, while confirming the impugned order, I reject the appeals.
7. Cross-objections, being in the nature of comments are not maintainable as the respondent has got full relief through the impugned order.