COLLECTOR OF CENTRAL EXCISE Vs. ANDHRA STEEL CORPN. LTD.
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
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V.P. Gulati, Member (T) -
(1.) THESE appeals and the Cross Objection arise out of the orders of the Collector of Central Excise (Appeals), Madras. The learned Advocate for the Respondents pleaded that the Cross Objection is only by way of comments on the pleas urged by the learned Collector in the appeal Memorandum. He has pleaded that legally, therefore, the same is not tenable. In view of this the Cross Objection is dismissed as not maintainable.
(2.) A . No. E/1/89/MAS. - The learned Collector is in appeal against the findings of the learned Collector (Appeals) allowing the benefit of MODVAT credit in respect of the scrap purchased from the market. Brief facts of the case are that the Respondents availed of MODVAT credit in terms of Order F. No. B22/5/86 -TRU dated 7 -4 -1986 under Rule 57G(2) allowing deemed credit in respect of waste and scrap. This benefit was available till 29 -8 -1986 when the deemed credit facility in respect of waste and scrap of iron and steel was withdrawn. The appellant -Collector urged the following grounds of appeal : -.
"The scrap received by the assessee is collected by street hawkers and traded by scrap dealers. The very manner in which scrap is obtained and traded is a proof of the fact that it does not suffer Central Excise duty as "SCRAP". The scrap on which deemed credit under MODVAT scheme was availed by M/s. Andhra Steel Corporation Ltd., Visakhapatnam is clearly recognisable as non -duty paid or charged to NIL rate of duty. In this regard clarification is issued by Ministry in letter F. No. 22/30/86 TRU dt. 29 -9 -1986 (copy enclosed) that Modvat credit is not available even prior to 29 -8 -1986 in respect of Bazaar scrap."
(3.) THE learned SDR for the Department pleaded that the Respondents had not obtained the scrap from the factory and the scrap utilised by the respondents could not be taken to be falling under Chapter 72 of the Central Excise Tariff and the scrap utilised by the respondents comprised of broken tins and the like articles. He, however, could not state the basis on which he was making the plea that the scrap utilised by the respondent was in the nature of broken tins etc. At this stage the learned Advocate for the respondents drew our attention to para 13 of the reply to the show cause notice and pointed out that the respondents at the earliest point of time had stated that the scrap utilised by them was not broken tins etc. but was good quality of scrap of iron or steel of a miscellaneous nature such as condemned motor parts, cuttings out of fabrication sheets, angles etc., light scrap bundles pressed with hydraulic machine, turning and borings etc. and the purchases were made from Railways and other Government departments also. Pleading further, Shri Narasimhan stated that the genus of the scrap was such that it fell under Chapter Heading 7203.10 and 7203.20. He pleaded that the Respondents could not be now at this stage call upon to prove the character or quality of the scrap as the same had been already utilised and in the face of the reply to the show cause notice about the nature of the scrap used by them the Revenue now cannot argue that this scrap used by them was not eligible for the benefit of MODVAT credit. He also pleaded that the credit was given to the Respondents only after the verification of the nature of the scrap used. He pleaded that the instructions relied upon by the appellant -Collector were executive in nature and without analysis of the facts regarding the nature of the scrap used no findings could be given against the Respondents that the scrap was not eligible for the benefit of MOD VAT credit just because the same was purchased from the open market. He pleaded that unless it could be shown as required under Rule 57G(2) that the scrap used by them was clearly recognisable as non -duty paid, no duty could be demanded. He further pleaded that the onus was on the Departmental authorities to prove that the scrap used was non -duty paid in nature. He pleaded that the authorities have brought no evidence on record to support their contention. In this context he cited the judgment of the Tribunal in the case of C.C.E. v. Rapid Engineering
1989 (43) E.L.T. 577 (Tri.). He also cited the judgment in the case of Arun Auto Spring v. C.C.E., 1990 (48) E.L.T. 543 (Tribunal), where the Tribunal has held that even when the goods were totally exempt, the onus is on the Department to show that the goods were not duty paid.
We observe that the learned Collector (Appeals) has followed the ratio of an earlier decision and he has held that bazaar scrap of iron and steel are eligible for MOD -VAT credit unless it is clearly recognisable as non -duty paid scrap and that in the absence of any evidence as to whether the scrap originated in a factory or in bazaar the same was not eligible for MODVAT credit. The plea of the appellant -Collector is that the scrap in question was bazaar scrap in the nature of broken tins, etc. and by its very nature the same has to be considered as non -duty paid and, therefore, not eligible for the benefit of the MOD VAT credit. The respondents, however, contended that the scrap comprised of turnings and borings and various other types of good quality scrap and not of the type mentioned by the appellant -Collector. We observe that no evidence has been placed before us in regard to the nature of the scrap which was taken as input. The Respondents in their reply to the show cause notice have indicated the type of scrap that was used by them. The learned original authority has not given any findings in regard to the nature of the scrap used nor the appellant -Collector in the memorandum of appeal has controverted the fact in regard to the nature of the scrap. The instructions cited by the appellant -Collector will have to be read in the context of scrap used by the Respondents and also in the context of the order issued under Rule 57G (2) whereunder deemed benefit of MODVAT credit has been allowed in respect of waste and scrap of iron and steel. We observe that it is not the plea of the appellant -Collector that the said order placed any restriction as to from which of the sources if the scrap was obtained the same would be considered as duty paid. Admittedly, the scrap has been obtained from the open market and the Respondents took the MODVAT credit only after filing a declaration. The Central Excise authorities also do not appear to have informed the Respondents as to the nature of the scrap that would be considered as eligible for the benefit of MOD VAT credit. The plea of the Respondent is that in fact the verification of the nature of the scrap was done by the authorities. In any case, if the authorities felt that the facility for MOD VAT credit was available for scrap of particular types obtained from certain sources, they should have done the necessary verification of each lot of scrap when it was received rather than at this belated stage taken the plea that the scrap should be considered as that of broken tins without any evidence having been adduced in this regard and when the scrap has already been utilised. As rightly pleaded by the Respondents, the onus is on the Department to prove that the credit taken by the Respondent was in respect of the non -duty paid scrap. This onus has not been discharged by the Department. In view of the above facts, we hold that the plea of the appellant -Collector is not maintainable in law and the appeal is, therefore, dismissed.;
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