1993 (8) TMI 155 - AT - Central Excise

Appeal granted for modvat credit on rejected steel ingots & scrap. Procedural lapses shouldn't deny benefits.

The appeal was allowed in favor of the appellants. The Tribunal set aside the lower authorities' decision to disallow modvat credit for rejected steel ... MODVAT Credit Issues:1. Availment of modvat credit for rejected steel ingots and scrap.2. Disallowance of modvat credit and imposition of penalty.3. Interpretation of rules regarding declaration of inputs.4. Consideration of defective iron and steel scraps as covered by the description of iron and steel scrap.Detailed Analysis:1. The appellants, engaged in manufacturing steel ingots and castings, availed modvat credit for rejected steel ingots and scrap under Rule 57A. However, Show Cause Notices were issued proposing disallowance of credit for not mentioning rejected steel ingots in the declaration under Rule 57G, along with a penalty for incorrect credit. The lower authorities confirmed the demand, leading to the appeal.2. The appellants contended that rejected steel ingots are akin to re-melting scrap, covered in the declaration, justifying the credit availed. Citing a previous Tribunal decision in Rishabh Ispat Ltd. v. Collector of Central Excise, it was established that defective ingots are deemed produced from steel melting scrap, entitling them to concessional duty rates. Consequently, the impugned order was set aside, and the appeal was allowed.3. The issue of inputs declaration arose, with authorities arguing that rejected steel ingots were not specifically declared, rendering the declaration inadequate. However, the Tribunal noted that a broad description of inputs suffices, allowing further inquiries by the officer if needed. Minor procedural lapses should not negate substantive benefits if the goods are otherwise eligible. The description of iron and steel scrap covered defective scraps, making the benefit applicable.4. Considering the settled issue from the Rishabh Ispat Ltd. case, which deemed defective scraps as covered by the iron and steel scrap description, a lenient view was warranted. Upholding the appeal, the Tribunal concurred with the Judicial Member's conclusion, emphasizing the eligibility of defective scraps for modvat credit under the given description.