1996 (5) TMI 177 - AT - Central Excise

Appellants win appeal for deemed credit on aluminum scrap under Notification No. 182/84.

The appellants challenged the disallowance of deemed credit taken, amounting to Rs. 3,54,696, under Notification No. 182/84 exempting waste and scrap of ... Modvat - Deemed credit Issues:1. Appellants' eligibility for deemed credit facility.2. Interpretation of Notification No. 182/84 regarding duty exemption conditions.3. Burden of proof on the department to establish non-duty paid character of goods.Analysis:The appeal challenged the Order-in-Appeal confirming the disallowance of deemed credit taken by the appellants, amounting to Rs. 3,54,696. The dispute arose from the interpretation of Notification No. 182/84, which exempted waste and scrap of aluminum from duty payment. The authorities contended that the appellants were not eligible for deemed credit as the scrap was recognizable as non-duty paid, leading to the demand raised. The appellants argued that the exemption under Notification No. 182/84 was conditional and the burden of proving non-duty paid nature rested on the department. The advocate cited relevant precedents, including Collector of Central Excise v. Balaji Alloys and Castings Pvt. Ltd., to support their position. They also highlighted that part of the scrap received had undergone duty payment, indicating duty payment on the goods.The department, represented by the ld. SDR, argued that Notification No. 182/84 did not impose any conditions for duty exemption and should be considered as granting unconditional exemption, thereby establishing the non-duty paid nature of the scrap. However, the Bench referred to previous decisions, particularly Re: Balaji Alloys, which established Notification No. 182/84 as a conditional exemption. The Bench emphasized that in cases of conditional exemption, the burden lies on the department to prove the non-duty paid character of the goods. As the department failed to provide substantial evidence beyond mere allegations in the Show Cause Notice, the Bench concluded that the appellants were indeed eligible to avail Modvat credit on a deemed credit basis.In the final judgment, the Bench allowed the appeal, setting aside the orders of the lower authorities. They held that the appellants were entitled to avail deemed credit as claimed by them, based on the interpretation of Notification No. 182/84 and the burden of proof on the department regarding the non-duty paid character of the goods. The appeal was disposed of in favor of the appellants.