2000 (5) TMI 42 - HC - Central Excise

Appeal granted for Modvat credit on steel scrap purchases; burden of proof on duty payment clarified.

The Tribunal allowed the appeal, granting deemed Modvat credit on steel scrap purchases. The High Court upheld the Tribunal's decision, emphasizing that ... Reference to High Court Issues:1. Deemed Modvat credit on steel scrap purchased from the market.2. Burden of proof in case of conditional exemption regarding duty payment on inputs.Deemed Modvat Credit Issue:The case involved M/s. Upper India Steel Manufacturing & Engineering Company Limited claiming deemed Modvat credit on steel scrap purchased from the market, which was rejected by the Collector. The Tribunal considered whether the purchases of steel and iron scrap were covered by bills/challans and if those bills/challans were produced before the authorities for claiming Modvat benefit. The Tribunal noted that the appellants had taken a stand and had produced challans/bills as evidence for claiming Modvat credit. Referring to previous decisions, the Tribunal allowed the appeal, stating that Modvat credit was admissible to the appellants. The department sought to refer a question of law to the High Court regarding the burden of proof in cases of conditional exemption, but the Tribunal rejected the application.Burden of Proof Issue:The department filed an application before the Tribunal to refer a question of law to the High Court regarding the burden of proof in cases of conditional exemption concerning duty payment on inputs. The Tribunal, however, dismissed the application under Section 35(G) of the Central Excise Act, 1944, stating that the question claimed by the department did not arise from its order. The Tribunal clarified that the issue of proving duty payment on inputs did not arise before it, as it found that the assessee had purchased scrap iron and steel from the market and provided challans and bills for verification. Therefore, the Tribunal deemed the application as misconceived and dismissed it.In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the burden of proof regarding duty payment on inputs did not shift to the department in cases of conditional exemption. The Court found that the Tribunal had correctly assessed the evidence presented by the assessee and dismissed the department's application for reference to the High Court.