TaxTMI 
TaxTMI 
1992 (4) TMI 116
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.... 18-5-1987 Demand Rs. 4,73,782.50 (b) Show cause notice dated 25-11-1982 Period 10-6-1987 to 8-10-1987 Demand Rs. 92,000/- 2. The appellants manufacture aluminium pistons, pins and rings falling under Heading 8409 and 8714 which are chargeable to duty on an ad valorem basis. The products are manufactured out of aluminium alloy ingots falling under Heading 76.01. The aluminium pistons and aluminium ingots are specified final products and inputs as per Notification No. 177/86-C.E. and accordingly the appellants were availing credit of duty on inputs received in his factory and utilised in the manufacture of final product after filing requisite declaration. As per Rule 57G of the Central Excise Rules a manufacturer of final products may take credit of duty paid on the inputs received by him provided they are accompanied by gate pass or other specified documents evidencing duty payment. The Rule also provides further that the Central Government, having regard to the period that has elapsed since excise duty was imposed on any inputs, direct that with effect from a specified date stocks of the said inputs in India excepting such stocks lying in a factory custo....
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....whether they have received the inputs from the manufacturing units after being cleared at Nil rate of duty will not amount to suppression. The Collector (Appeals) has discussed this aspect of alleged suppression in paragraph 5 of the impugned order by holding that since the appellants suppressed the fact that the inputs received by them were actually subject to nil duty the 5 year period prescribed under the proviso to Section 11A would be applicable. In view of a subsequent finding on merits that the inputs cannot be treated as charged to nil rate of duty, the question of suppression does not arise. On other aspect viz. whether the provisions of Section 11A apply to a demand under Rule 57-I prior to its amendment we find that this issue has been settled by the Hon'ble Karnataka High Court in the case of Tungabadhra Steel Products v. Superintendent of Central Excise and Another (1991 33 ECC 140 Kar.). The discussion on this point is contained in paragraphs 15, 16 and 17 of the above judgment which are reproduced below: "At the outset, it must be noticed that the Department appears to have accepted the decisions of the CEGAT rendered in a number of cases referred to earlier, whic....
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....lar inputs received during the month and the amount of duty taken as credit along with extracts of Parts I and II of Form RG 23-A, and, also make available the documents evidencing the payment of duty on the inputs taken, to the proper officer. Therefore, having regard to the scheme, any reversal of the credit availed of by the manufacturer wrongly, results in withdrawal of the allowance of the credit and the proper officer proceeds to recover the amount equivalent to the disallowance in the manner prescribed in Rule 57-I." 6. In view of the above we hold that the demand under Rule 57-I can only be raised subject to the time limit prescribed under Section 11A. Therefore, the demand of Rs. 4,73,782.50 forming part of the subject matter in E/59/89-NRB is barred by limitation. 7. On the merits of the case, the order dated 7-4-1986, has been issued by the Government of India under proviso 2 to Rule 57G to remove the difficulties of assessees who purchase their inputs either from the market or from secondary manufacturers and the intention is to reduce cascading effect of payment of duty. The benefit of the deemed credit cannot be extended to cases where the inputs are clearly rec....
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....he deemed credit in respect of inputs wholly exempted from duty. It is not proper to construe the provisions made in the subsequent order dated 20-5- 1988 that too issued in supersession of the earlier orders as holding the ground during the period 1986-87, when the deemed credit is to be construed only in terms of order dated 7-4-1986. We are also unable to take a view that the subsequent order could be a clarification of the earlier order, since the earlier orders have been superseded. In this view of the matter, we hold that even if the goods have been received from a manufacturer availing of exemption under Notification No. 208/83, deemed credit in terms of the Government of India's order dated 7-4-1986 would be available". 8. This order of the Tribunal has been followed subsequently in the case of Collector of Central Excise, Chandigarh v. M/s. Mittal Metal Industries and Others [Order No. A-538 to 542/90-NRB dated 20-12-1990 reported in 1991 (54) E.L.T. 290]. In this case the Department seeks to rely upon the certificate from the Jurisdictional Range Officer to the effect that M/s. Bafna Trading Co. (who supplied aluminium ingots to the appellants) were manufacturing alumi....