TaxTMI 
TaxTMI 
1992 (4) TMI 132
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....not in stock with them but were in process or had been converted into finished goods. Further, he had held that certain quantity of zinc scrap had been received by them from their other battery plants. They could not be considered as received by them from the market and hence not entitled for deemed credit. 2. Shri Lakshmi Kumaran, learned counsel for the appellants, submitted at the outset that when the Modvat Scheme was introduced with effect from 1-3-1986, the new Central Excise Tariff Act had just come into effect from 28-2-1986 and new rates of duty had come into force. In terms of the Provisional Collection of Taxes Act, the new rates of duty came into effect immediately. In the case of zinc and products thereof, the new rates were higher than the earlier rates and they cleared their products after 1-3-1986 on payment of such higher rates of duty. To compensate the manufacturers for such higher rates of duty, as the exercise of introduction of the new Tariff was stated to be revenue neutral, the Modvat scheme was introduced for certain products made from certain inputs. Zinc figured in the scheme as eligible inputs as well as final products and Battery Cell their product w....
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....se & Customs vide their letter F. No. 263/8/89 CX. 8 dated 1-3-1989 as Circular No. 3/89 wherein it was clarified that deemed Modvat Credit should be permitted on all the inputs whether purchased or otherwise received by the manufacturers unless such inputs are clearly recognisable as non-duty paid or chargeable to nil rate of duty. He cited the decision of the South Regional Bench in Impex Engineering Co. Pvt. Ltd. v. Collector of Central Excise, Hyderabad, reported in 1990 (47) E.L.T. 32 (Tri.) = 1990 (15) ETR 186 wherein the above said instructions had been followed, rejecting the stand of the department that Modvat Credit cannot be granted inasmuch as the goods had not been purchased by the appellants from the market. He, therefore, pleaded that the appeal may be allowed and they may be granted credit benefit. 3. Shri A. Choudhury, learned Departmental Representative countered the points raised by the learned counsel when he gave his reply on behalf of the respondent Collector. He contended that the wording of the deemed credit order dated 7-4-1986 specifically limited the scope thereof to the inputs which were in stock with the manufacturer. Though the Transitional Provisio....
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....ck as such on 1-3-1986 or thereafter and those which are in process or have become finished products. This is what they had claimed and in spite of holding as above, the Collector (Appeals) had come to a contradictory conclusion that the Assistant Collector had correctly taken the literal interpretation of the expression inputs and stocks. Shri Lakshmi Kumaran, therefore, reiterated his plea that the appeal may be allowed. 5. We have considered the submissions made by both sides. We find that the Assistant Collector had allowed them the benefit of deemed credit only on zinc spelter which was in stock in the store. A quantity of spelter to the extent of 53168 kgs which was reportedly on the floor was not given the same benefit. As long as it was unwrought zinc spelter, the fact that it was in the floor and not in the store should not deprive them of the benefit claimed by them. A quantity of 444800 billets is staled to have been on the floor on 1-3-1986. If this material had been received from outside and satisfied the relevant conditions it would be eligible for deemed credit but if these billets had been produced by the appellants in their own factory from the inputs spelter, t....
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....tention, we find that the deemed credit order has been issued under the second proviso to Rule 57G(2) for treating, subject to exceptions, all stocks of the inputs in the country as duty paid. The language employed in the said order also refers to inputs purchased from outside and lying in stock on or after 1-3-1986 with the manufacturers. The contention of the lower authorities is that the inputs were mostly not in stock as such and hence, strictly in terms of the said order and read by itself, the benefit of deemed credit order can be extended only to the inputs remaining in stock as such with the manufacturers. It will, however, make no difference whether the inputs are in stock in the storeroom or on the floor of the manufacturing premises having been issued for production. To that extent, the Assistant Collector's order undoubtedly needs to be modified to extend the benefit to 53168 kgs of spelter in stock on the floor. 8. Rule 57H as it is worded, constitutes are Transitional Provisions, which should be applied, notwithstanding anything contained in Rule 57G. The main requirement under Rule 57G which is sought to be relaxed under Rule 57H is that the manufacturer may, afte....