SRI KRISHNA STEELS Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) THIS appeal is directed against the order of the Collector of Central Excise, Coimbatore dated 27-10-1988 under which the appellant has been directed to recredit a sum of Rs. 4,86,054.07 on the ground that erroneous Modvat credit had been availed of by the appellant, besides the penalty of Rs. 18,000/- under Rule 173-Q(bb) of the Central Excise Rules, 1944.

(2.) The appellant is engaged in re-rolling of steel materials and the end-product manufactured are M.S. flats, M.S. rods, M.S. bars, M.S. angles out of M.S. angles and M.S. rods etc. The appellant submitted a declaration for availing the benefit of Modvat credit on 31-3-1987 which was acknowledged by the Department on 1-4-1987 and thereafter the appellant was availing the Modvat credit in respect of the specified goods received by him and this was also evidenced by the R.T.12 returns periodically submitted by the appellant which were also accepted after scrutiny by the proper officer without any objection. Subsequently, on 21-9-1987 the Preventive Officers of Central Excise verified the stock and accounts of the appellant and found that the appellant had taken erroneous credit on inputs without valid Central Excise documents for a sum of Rs. 4,86,054.07 for the period 1st April, 1987 to 30th August, 1987 and the proceedings instituted against the appellant by issue of a show cause notice eventually culminated in the present impugned order now appealed against.

(3.) SHRI Vadivelu, the learned Departmental Representative submitted that the statutory direction of the Government of India issued in terms of the second proviso to Rule 57 (G)(2) is to the effect that ingots and re-rollable materials of iron or steel purchased from outside on and 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 may be allowed at that rate without production of documents evidencing payment of duty. The learned D.R. submitted that though this statutory direction would govern now the case of the appellant, at the time when scrutiny was made by the Departmental Officers on 21-9-1987 the statutory direction of the Government of India was not in force and the view of the Government then was that credit would not be available for such goods in such situation.