2006 (1) TMI 527

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....urers of non-alloy steel ingots and alloy steel ingots falling under Chapter 72. On introduction of Compounded Levy Scheme with effect from 1-9-97 the appellants opted for the same and started manufacturing the non-alloy Steel ingots and started paying duty as was ascertained by the competent authority. The appellants in the month of September, 1997 cleared alloy steel ingots @ 15% Ad valorem and utilized the balance of amount of Modvat credit in their RG23A Part II account for part duty liability and the balance duty liability was discharged by paying the same through PLA. A show cause notice was issued to the appellants to recover the Modvat credit alleging, they could not utilize the Modvat credit once having opted for payment of duty un....

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.... as well as non-alloy steel ingots in his factory. The show cause notice runs on the surmise that the appellant having opted to work under compounded levy scheme on non-alloy steel cannot utilize the input stage credit for discharging duty liability on alloy steel ingots. It is necessary to look in to the provisions of Compounded levy scheme which were introduced by notification No. 31/97-C.E. (N.T.) dated 1st August 1997 which reads as under : "Hot re-rolled products of non-alloy steel - Notified goods under Section 3A of Central Excise Act, 1944. - In exercise of the powers conferred by sub-section (1) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government, having regard to the nature of the process of manufa....

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....levy scheme is made applicable. The said Rule during the relevant period read as under : "Rule 57F. Manner of utilization of inputs and the credit allowed in respect of duty paid thereon. - (1)  ........................... (2)     ...........................           ........................... (17) Notwithstanding anything contained in sub-rule (12) or rule 57A, any credit of specified duty lying unutilised, -   (a)   ..................   (b)   .................. (c)     on the first day of August, 1997, with the manufacturer of ingots and billets of non-alloy steel falling under heading No....