Full Judgment
1. The learned Counsel stated that these are modvat matters in which inputs were covered by the Deemed Credit order dated 7-4-1986 (as it stood prior to amendment) but the items were wholly exempted from duty under conditional notification and had been purchased from the market.
This issue is squarely covered by a series of orders of the Tribunal the latest being A/538-542/90-NRB dated 20-12-1990.
The learned JDR stated that these are covered matters. But he would also like to reiterate the Department's stand as reflected in the appeal memorandum; And would also like to draw attention to the judgment of Punjab & Haryana High Court at Chandigarh dated 4-12-1989 passed in Civil Writ Petition Nos. 6599 and others reported in 1990 (49) ELT 22 (P & H). It was his submission that the ratio of the judgment of the High Court was that there was no general rule that the burden lies on the department to show that certain input is recognisable as being non-duty paid or charged to nil rate of duty.
The learned counsel stated that in these Writ Petitions the issue was not finally decided but the matter was simply remanded to the authorities below with passing observations. Hence, she would pray that the Tribunal may continue to follow well established precedent.
She also stated that this order was passed in 1989, whereas the Tribunal has passed a series of orders thereafter, the latest being one cited above by her.
2. We observe that it is admittedly a case squarely covered by a series of the Tribunal's orders the latest being A/538-542/90-NRB dated 20-12-1990.
We note that while agreeing to the above position, the learned DR has drawn our attention to the grounds of appeal and the Judgment of the Punjab & Haryana High Court dated 4-12-1989.
In so far as the appeal memorandum is concerned, we find that the department has urged the same grounds as in the cases cited above and the issues referred to therein have admittedly been settled already.
In so far as the judgment or the Punjab and Haryana High Court is concerned, we find that there is no conflict between this judgment and the orders of the Tribunal referred to above.
While referring to the second proviso to Rule 57G(2) the Hon'ble High Court has observed that "The scope to which the legal fiction had been made applicable would depend on the words used in the notification issued under the second proviso and not on the amplitude of the enabling powers contained in the second proviso itself." Again the Hon'ble High Court has observed that "that the normal rule which appears to have been kept in view by the legislature as well as the statutory rules issued under various Rules is that where no duty is paid, no credit is allowed and where duty has been only paid partly, credit is allowed only to the extent duty has been paid".
3. We are in respectful agreement with these observations and in fact this is precisely the point the Tribunal has itself emphasised.
The Hon'ble High Court has further observed that "I am of the considered view that there is no general rule that the burden is on the department to show that a certain input is recognisable as being non-duty paid or charged to nil rate of duty. In my view, the initial burden is on the manufacturer claiming deemed credit to take a definite stand with regard to a certain input. It is then open to the department to accept that claim or to contest the same".
4. We are also in respectful agreement with this view. In other words there is no conflict between the observations of the Hon'ble High Court and the orders of this Tribunal as there is no doubt that "the broad approach to be adopted being that in the first instance the manufacturer has to take a stand with regard to a certain type of input. The department has to either accept that stand or to contest the same and depending on the facts and circumstances of the each case, the same has to be decided whether that input falls in any one of the exceptions".
In the cases before us, the manufacturers have taken a definite stand with regard to the inputs in question and the department has contested the claim. Therefore the Tribunal was required to interpret and apply notifications and announce the orders.
5. As far as we can see the department has not been able to show how the Punjab and Haryana High Court judgments could help their cause in these circumstances.
We see no reason to differ from the orders already passed and cited above which admittedly apply to the present cases.