TaxTMI 
TaxTMI 
1996 (9) TMI 290
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....RU. It was alleged vide show cause notice dated 27-5-1987 that the scrap received from the open market by M/s. Jagat Steel Pvt. Ltd. was clearly recognisable as non-duty paid and the deemed Modvat credit was not admissible as per the conditions laid down in the Ministry's order dated 7-4-1986 aforesaid. The assessee had not produced any evidence of payment of duty on the scrap in question. It was their plea that no such proof of payment of duty was required. The Assistant Collector of Central Excise, Patiala, who adjudicated the matter held that the deemed Modvat credit was not admissible on the scrap received from the open market without proof of payment of duty by the assessee during the period in question prior to 1-4-1987. He confirmed ....
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....t the matter had already been settled by the Larger Bench of the Tribunal in favour of the Revenue in the case of M/s. Machine Builders & Ors. v. Collector of Central Excise, Bolpur, reported in 1996 (83) E.L.T. 576 (Tribunal) = 1996 (12) RLT 817 (Tribunal). 5. I have carefully considered the matter in the Ministry's order F.No. B-22/5/86-TRU dated 7-4-1986 [at page T6 of 1986 (25) E.L.T.] issued under the 2nd Proviso to Rule 57G(ii), it was provided that no deemed credit shall be allowed if the inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty. The 2nd Proviso to Rule 57G(2) of the Central Excise Rules, 1944 (hereinafter referred to as the `Rules') provided that having regard to the period that h....
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....ap of iron and steel like bazar scrap which was clearly recognisable as being non-duty paid or charged to nil rate of duty, were not entitled to the deemed credit even during the period prior to 29-8-1986. It was further clarified that the amending order of 29-8-1986 was issued to deal with the problem of many manufacturers claiming deemed credit even in respect of scraps like bazar scrap (refer Ministry's Order F.No. B-22/30/86-TRU, dated 29-9-1986 at page 7 Annexure `C' of the paper book). Directions dated 20-10-1987 applied only from 1-4-1987 - the period with which we are not concerned in these proceedings. In this connection reference may be made to the Tribunal's decision in the case of Sri Krishna Steels v. Collector of Central Excis....
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....as available. It was held that the intention was not to deem that inputs which actually did not suffer duty were inputs which suffered duty, and the purpose was to ensure the benefit to those who use inputs in the manufacture of which duty has actually been paid but it might not be possible to produce duty paying documents which will unerringly connect the documents or duty payment with the particular inputs (refer Para 15 of the order). In Para 16 the mischief sought to be avoided by the deemed proviso had been discussed. It was observed that mischief could not have been overcome by stipulating that credit is available even if duty has not been paid on inputs, for that would be against the pivotal element of the scheme. If duty need not be....