Assessment of used iron and steel rolls depends on proof of Modvat credit and whether clearance was as scrap or capital goods.

Used iron and steel rolls cleared by an assessee may be assessable either as used capital goods or as waste and scrap, depending on the factual basis for removal and the treatment of the goods in the records. The Tribunal noted that the demand could not be sustained on a presumption alone where the show cause notices and order did not positively establish that Modvat credit had been taken on the rolls. At the same time, the factual position as to the period of use, condemnation, and manner of clearance required verification. The matter was therefore remanded for fresh decision after examination of the relevant facts.

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Issues: Whether the used iron and steel rolls cleared by the assessee were liable to duty under the provision applicable to removal of used capital goods, or whether they were rightly assessable as waste and scrap, and whether the demand could be sustained in the absence of evidence showing availment of Modvat credit on the rolls in question.

Analysis: The Tribunal examined the nature of the clearances and the evidence supporting the demand. One view was that the assessee had not produced documentary evidence showing the period of use or the internal records by which the rolls were condemned and cleared as scrap, and that the matter should be remanded to allow the assessee to establish its case. The other view was that the show cause notices and the impugned order did not establish, with any positive material, that the cleared rolls were capital goods on which Modvat credit had in fact been taken, and that a demand based merely on the absence of records or on presumption could not be sustained. The majority agreed that the factual position required verification as to whether credit had been taken and whether the goods were cleared as used rolls or as waste and scrap.

Conclusion: The impugned order could not be sustained on the existing record and the matter was remanded for fresh decision after verification of the relevant facts.

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