1997 (3) TMI 308

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.... petitions are allowed and the appeals taken up for hearing with the consent of both the sides. 2. The appellants are manufacturers of steel products by the process of rerolling of rerollable materials. They had purchased their inputs from various dealers whose names have been listed in the answer to the respective show cause notices. The dispute relates to the period from September, 1986 till 31-3-1987. They took the benefit of deemed Modvat credit during this period in terms of Government of India order dated 7-4-1986 issued under Rule 57G. Show cause notices were issued in May, 1987 proposing disallowance of Modvat credit taken alleging that the inputs in question used by the appellants were not covered by the aforesaid deemed cr....

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....peals have been filed against the common appellate order. 3. Shri G.S. Bhangoo, learned Counsel for all the appellants stated that the inputs in question had been purchased by the appellants from the open market from dealers. There is no evidence produced by the Department that these have been manufactured and cleared without payment of duty availing of full exemption from duty. It has been held in a number of decisions by the High Courts and by the Tribunal that where the exemption is conditional it is for the Department to establish that the goods in question had been cleared without payment of duty after availing of such an exemption. In this connection, he referred in particular to the decision of the Larger Bench in the case of....

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....or the purpose of qualifying amount of duty, namely, Rs. 365/- PMT. From a perusal of the show cause notices it is seen that the reference is to purchase of various inputs items from dealers. There is nothing to indicate that the Department had any evidence that these items were clearly recognisable are not duty paid or charged to nil rate of duty. The discussion in the order relating to M/s. Panesar Steel Agro Industries would apply with equal force to the present case. It was held in the said order that the Assistant Collector has held that the deemed credit facility was available to the users under Rule 56A but was not admissible where the assessee switched over to the Modvat scheme until that facility was restored by the Ministry vide t....