1998 (7) TMI 261

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....crap of old rail material, broken machinery parts and scrap purchased from open market as input in the manufacture of the aforesaid final products. They availed deemed Modvat credit on the above mentioned items during the period June, 1994 to September, 1994 amounting to Rs. 1,36,453.00. Revenue however, felt that deemed Modvat credit taken by them was not correct inasmuch as the scrap was not generated due to any manufacturing activity in a factory of production and as such was clearly recognisable as non-duty paid material. Hence, a show cause notice dated 20-12-1994 was issued proposing to reverse the aforesaid Modvat credit and if already utilised, to recover the same. On adjudication, the Assistant Collector, Faizabad confirmed the ....

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....s a bazar scrap that is discarded and broken articles, machinery parts, etc. Consequently on its clearance duty could not be paid and therefore it is clearly recognisable as non-duty paid and hence, the deemed credit order would not be applicable in view of the provisions of Rule 57G, even though no such restriction has been placed in the relevant deemed credit order. The fact that deemed credit is not available in respect of excisable goods which are clearly recognisable as non-duty paid is upheld, he submits, by Tribunal's following judgments :- 1. Jagat Steels Pvt. Ltd. v. CCE, Chandigarh - 1996 (88) E.L.T. 776 2. Man Ind. Corpn. Ltd. v. CCE, Jaipur - 1996 (88) E.L.T. 178. 4. I have carefully considered the pleas ....

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....uty. On a careful analysis of the aforesaid Proviso, it is apparent that the Central Government has got the power vested in it, having a regard to the various factors mentioned in the said Proviso to direct that all stocks of specified inputs in the country shall be deemed to be duty paid except in respect of stocks lying in the following places :- 1. Stocks of such inputs lying in a factory; 2. In a Customs area (as defined in the Customs Act, 1962); 3. A warehouse. Stocks lying in these three places has been considered, in my view by the Rule itself that they are clearly recognisable as being non-duty-paid. Therefore, the Central Government does not have the power to issue any order under the second Proviso t....