STEEL AUTHORITY OF INDIA LTD Vs. COLLECTOR OF CENTRAL EXCISE
LAWS(CE)-1991-1-7
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 09,1991

Appellant
VERSUS
Respondents

JUDGEMENT

K. Sankararaman, Member (T) - (1.) THESE are a batch of three appeals filed by M/s. Steel Authority of India, Rourkela filed against a common order-in-appeal No. 214-216/BBSR/89, dated 29-12-1989 passed by the Collector of Central Excise (Appeals), Calcutta rejecting their appeals and upholding three orders-in-original passed by the Assistant Collector of Central Excise, Rourkela disallowing Modvat Credits for Rs. 5,14,308.00, Rs. 15,45,253.05 and Rs. 2,20,580.08. As the appeals involved common issues, they were argued together on behalf of the appellants by learned Counsel, Shri N. Mookherjee and Shri M.N. Biswas, learned S.D.R. on behalf of the respondent Collector and are disposed of by this common order.
(2.) The issues involved in the three appeals relate to disallowance of Modvat Credit in respect of scrap arising in the appellants' Steel Plant in the course of manufacture of E.R.W. and SW Pipes from duty-paid H.R. Coil. It is their case that the scrap which arises in the form of HR Coil Ends, known as Tongues, Side Trimming and Turning and...which are all deemed to be duty-paid materials which are distinguishable as duty-paid scrap. This scrap has no other use except for melting purpose. They had taken Modvat Credit on such scrap in terms of Government of India order F. No. B-22/5/86- T.R.V., dated 7-4-1986 as amended. The credit so taken was disallowed by the Assistant Collector vide his orders dated 18-11-1988 following show cause notices, dated 11-8-1988. It was held by the Assistant Collector with reference to their explanation submitted by them in connection with a similar show cause notice dated 23-5-1988 that the deemed credit facility is not applicable to them in respect of the scrap in question as the same was exempt from duty. The said order granting deemed credit is not applicable as clearly laid down therein where the inputs are clearly recognisable as being non-duty paid or chargeable to nil rate of duty. The Collector (Appeals) maintained the orders of the Assistant Collector holding the same view point. Thereby the present appeals. Shri N. Mookherjee, while arguing the appeals, adopted the reasoning contained in the appeal memoranda. He submitted that pipes are made from duty-paid sheets/strips. Such pipes are exempt from duty if made from duty-paid sheets/strips, Waste or scrap are exempt from duty under Notification No. 54/86, dated 10-2-1986. Scrap figures at Serial No. 3 of the Table and the rate of duty is shown as nil. The disputed period involved in these three appeals is January, February and March, 1988. He relied upon the following decisions. (i) 1988 (37) ELT 323 in the case of Collector of Central Excise v. Kapsons Electro Stampings; (ii) 1989 (43) ELT 577 in the case of Rapsri Engineering Industries Pvt. Ltd. v. Collector of Central Excise; (iii) 1990 (27) ECR 398 in the case of Electricals Switchgears (P) Ltd. v. Collector of Central Excise, Chandigarh; (iv) 1990 (49) ELT 284 (Tri.) in the case of Arun Auto Spring and Manufacturing Co. v. Collector of Central Excise, Rajkot. He contended that the Department held that the goods are non-duty-paid, but there is no evidence leading to that conclusion. He, therefore, pleaded that the appeals may be allowed and the impugned orders set aside, permitting them to utilise the Modvat Credit amounts disallowed.
(3.) THE arguments were strongly resisted by Shri A. Chowdhury, learned Departmental Representative. He supported the impugned order which was based on a correct appreciation of the legal position. Modvat facility is available only if the inputs are duty-paid. In this case, while HR Strips are no doubt duty-paid the scrap arising therefrom in the course of manufacture of pipes is not duty-paid and hence no Modvat Credit is available in respect of such scrap. THE deemed credit order specifically excludes from its scope goods that are chargeable to nil rate of duty or are non-duty-paid. As regards the wording of Exemption Notification No. 54/86 in so far as scrap is concerned the relevant entry regarding the rate of duty under Column 4 of the Table reads 'Nil'. THE effect is different from a provision where goods are exempt from the whole of duty of excise leviable as is the case in Notification No. 208/83. Shri Chowdhury, therefore, pleaded that the appeals may be rejected as the scrap were excluded from the scope of deemed credit order in view of the nil rate of duty applicable thereto.;


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