TaxTMI 
TaxTMI 
1994 (7) TMI 148
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....ed that they had purchased MS Scrap from the rolling mills but have emphasised that the rolling mills have purchased it from the market and after selecting re-rollable material out of it they had sold the melting scrap to them under their own invoices/bills. I am unable to agree with this contention of the appellants as the appellants had purchased the scrap from the rolling mills where scrap is generated out of the process of rolling of ingots/billets. Keeping this in view, I do not find any merit in the appeal of the appellants, I uphold the impugned order and reject the appeal of the appellants." 2. Briefly stated the facts of the case are that M/s Achal Alloys Pvt. Ltd. are manufacturers of steel ingots classifiable under Centra....
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....l was not accompanied with the duty paying documents was not correct; that no evidence has been brought on record to prove that the scrap was non-duty paid; that Bombay High Court in the case of Vapson Products, Bombay v. UOI reported in 1987 (27) E.L.T. 608 (Bom.) = 1988 (15) ECR 138 had held : "Apart from the presumption which arises in favour of the petitioners, the petitioners have produced before the Department documents to substantiate their claim that duty was paid on the base dyes purchased from the open market. The petitioners have produced invoices in respect of the purchase and that was the requirement prescribed by the Collector of Central Excise by publication of trade notice dated 25-11-1961. The trade notice, inter alia, m....
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.... of duty. Summing up his arguments, Shri Ligga prayed that in view of the pre-ponderance of the ratio of the judgments cited by him and relied upon, the impugned order may be set aside. 4. Shri B.D. Bhagat, the ld. JDR appearing for the respondent submitted that the appellant had purchased the rolling scrap from Rolling Mills; that this scrap was either generated or purchased by Rolling Mills on payment of nil duty; that this fact is clearly stated in the Show Cause notice. Thus, it was not necessary to prove further that the goods were recognisable as non-duty paid. He submitted that modvat credit even in the form of deemed credit as a matter of policy is the refund of duty actually paid on the goods; that in the scheme of deemed c....
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....rder, the same is reproduced below :- "10. The aforesaid arguments further narrow down the area of interpretation with regard to the following provisions in the order :- "If such inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty. It is not the case of the department that the goods have been removed from Excise or Customs area without payment of duty and hence they are to be construed as non-duty paid. The department states that the goods have been supplied by a manufacturer, who is entitled to avail of the exemption legally extended under Notification No. 208/83. In view of this position, the goods cleared, availing of exemption legitimately available to the manufacturer, cannot be construed....
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....te' of duty as specified in the First Schedule. This view of ours is also strengthened by the fact that the Govt. of India in its later order dated 20-5-1988 specifically referred to goods wholly exempted from duty as not eligible for deemed modvat credit. The relevant portion of the order of the Govt. of India No. 342/10/88-TRU dated 2-5-1988 is reproduced below :- "No such credit shall, however, be allowed - (i)... ... ... (ii) if such inputs are clearly recognisable as being non-duty paid or wholly exempt from duty or charged to nil rate of duty." 11. This later order of the Govt. of India itself brings out the distinction between the goods, wholly exempted from duty vis-a-vis those goods charged to Nil rate of duty....
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....ly exempted from duty as has been done in order dated 20-5-1988 deemed modvat credit at the specified rate prescribed in the relevant order dated 7-4-1986 is required to be extended. We, therefore, allow all the four appeals with consequential relief." 7. I have carefully considered the submissions made by both sides and the case law cited and relied upon by them. On the one side there is the judgment of the Tribunal in the case of Arun Auto Spring cited supra which distinguishes the non-duty paid character of the goods observing that the goods cleared availing of exemption legitimately available to the manufacturer, cannot be construed to be non-duty paid whereas in the case of Capson Electro Stampings, it was observed by the Tribu....