- (1.) In order to decide the instant appeal, let us take stock of the facts which are not in dispute. These are as follows: The Appellant herein is engaged in the manufacture of bars and rods of mild steel falling under Chapter 72 of the Central Excise Tariff Act, 1985. These bars and rods of mild steel are manufactured from reliable and re-rollable old and discarded rails, wheels, fish plates, etc. The aforesaid raw materials/inputs are purchased by the Appellant from Railway authorities in the auction held by the Railways, without melting the same and are duly registered with the Central Excise Department. The Appellant is also registered under the Central Excise Act. While removing the bars and rods of mild steel from its factory premises after its manufacture, at the time of sale, the Appellant faced Excise duty thereupon. However, the Appellant wants MODVAT credit of the duty which was already paid by the Railways on the rods, wheels, fish plates, etc., when the Railways initially purchased the same and which the Railways sold to the Appellant after using the said products for a number of years. It is also a matter of record that at the time of purchase of the discarded rods, wheels, fish plates, etc., from the Railways in auction, the Appellant did not pay any Excise duty. As pointed out above, the Appellant wants credit of the Excise duty which was paid by the Railways when they originally purchased the aforesaid material. The question, therefore, that arises for consideration on the aforesaid facts is as to whether the Appellant is entitled to claim the credit of the said duty paid by the Railways.
(2.) The statutory regime that covers the field is contained in Rule 57G of the Central Excise Rules, 1944 (hereinafter referred to as Rules), and two notifications dated 13-7-1992 and 1-3-1994. Rule 57G makes the following reading: "RULE 57G. Procedure to be observed by the manufacturer. - (1) Every manufacturer intending to take credit of the duty paid on inputs under Rule 57A, shall file a declaration with the Assistant Collector of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in each of the said final products and such other information as the said Assistant Collector may require, and obtain a dated acknowledgment of the said declaration. (2) A manufacturer who has filed a declaration under Sub-rule (1) may, after obtaining the acknowledgment aforesaid, take credit of the duty paid on the inputs received by him: Provided that no credit shall be taken unless the inputs are received in the factory under the cover of a Gate Pass, an A.R.1, a Bill of Entry or any other document as may be prescribed by the Central Board of Excise and Customs [constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] in this behalf evidencing the payment of duty on such inputs: 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)] or 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: Provided also that the manufacturer shall take all reasonable steps to ensure that the inputs acquired by him are goods on which the appropriate duty as indicated in the documents accompanying the goods, has been paid. (3) A manufacturer of the final products shall maintain, - (a) an account in Form R.G.23A, Parts I and II; (b) in respect of duty payable on final products, an account-current with adequate balance to cover the duty of excise payable on the final products cleared at any time. (4) A manufacturer of the final products shall submit to Superintendent of the Central Excise the original documents evidencing the payment of duty along with extracts of Parts I and II of form R.G.23A every month and the Superintendent of Central Excise shall, after verifying their genuineness, deface such documents and return the same to the manufacturer."
(3.) As per the second proviso to Rule 57G(2), when considerable time has elapsed since the duty of Excise was imposed on any inputs, it is deemed that the duty was paid thereupon and credit of the duty in respect of the said inputs can 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.;