Esskay Jay Ispat Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. heard shri b n chattopadhyay, consultant for appellant and shri k k sanyal, jdr for respondent.2. ld. consultant submits that the appellant are engaged in the manufacture of "m.s. twisted bars" falling under sub-heading no.7214.90 of c.e.t.a. act, 1985. they were under compound levy scheme during the period from september 1997 to march 2000. after withdrawal of the compound levy scheme w.e.f. 01.04.2000 the appellant availed of modvat credit on the inputs which was cleared from the factory of the manufacturer prior to 1.4.2000 and received by the appellant during the period from 1.4.2000 to 30.04.2000. they availed of the deemed cenvat credit of rs. 2, 38,207.56 on 176.450 metric tones of inputs m.s ingots. the department disputed availing of the credit by the appellants and proceedings were initiated. they allege that the credit taken by the appellants was not proper. the appellants in their reply dated 12.2.2001 to the show cause notice claimed that they were eligible to have the benefit of deemed cenvat credit received by them and cleared from the factory of the manufacturers in march 2000 and received by them during the month of april 2000. the assistant commissioner confirmed the demand of duty of rs. 1, 05, 870.06 and imposed a penalty of rs. 25,000/- on the appellants under rule 173q of central excise rules, 1944 and interest was also charged under section 11aa of central excise act, 1944. the commissioner (appeals), patna confirmed the demand. ld. consultant submits that the appellants purchased the goods from the manufacturer who had been paying central excise duty under compounded levy scheme. the goods were cleared from the factory of the manufacturer during march 2000 when the compounded levy system was in vogue. notification no. 29/2000-ce (nt) dated 30.03.2000 was issued to enable the manufacturers to avail credit on the goods manufactured up to 31.3.2000 and cleared from 1.4.2000 to 30.4.2000. therefore he submits that the appellants were eligible to have the benefit of deemed cenvat credit on the inputs at the rate of 12 per cent adveloram when purchased directly from the manufacturers working under the provisions of compounded levy system under notification no. 58/97 dated 30.8.97 as amended. deemed modvat credit was also admissible on the inputs purchased from manufacturers working under compound levy scheme. he submits that the commissioner (appeals) failed to appreciate that the appellant purchased inputs viz. m.s.ingots from the manufacturers who had delivered the goods from their factory during the month of march 2000 when the compound levy system was in vogue. the goods, however, were received by them in april 2000 and they were eligible to have the benefit of deemed credit by virtue of notification no. 29/2000. therefore he submits that the appeal may be allowed and the deemed credit may be allowed to the appellant. he relies on the decision rendered in the case of j.m.g. steel (p) ltd. v.cce, patna 3. ld. jdr supports the impugned order. he submits that the benefit of notification no.29/2000-c.e. (nt) was not available to the appellant.the appellant under rule 57ab is entitled to have cenvat credit equal to the amount of duty supplied by the inputs i.e. m.s. ingots which was fixed at the rate of 750 per metric tone. therefore he submits that he appeal may be rejected.4. the contention of the ld. commissioner that because of the fact that the manufacturers did not discharge their duty liability as per the capacity of production fixed by the commissioner and m.s. ingots had suffered duty as per the rate fixed under rule 96zo(1) at the rate of 750 per metric tone and the appellant was entitled to have the credit equal to the amount of the duty suffered by the inputs i.e. m.s. ingots is entirely erroneous. the manufacturers no doubt had paid the duty under compounded levy scheme ad paid the duty under provisions of rule 96zo(1) when the duty was paid at the rate of 750 per metric tone as fixed under the rule 96zo(1) of the central excise rules, 1944. they paid the duty under compounded levy system. it cannot be said that the manufacturer of the ingots did not pay the duty under the compounded levy system. the observation is contrary to fact. thee is no dispute that the goods were cleared from the manufacturer who had been working under the provisions of compounded levy system. therefore they are eligible to have the benefit of deemed cenvat credit under the provisions of erstwhile notification no. 58/97-c.e.(n.t.). it has been envisaged that the duty of excise under the central excise act, 1944 shall be deemed to have been paid on the inputs mentioned in the said notification and the same should be equivalent an amount calculated at the rate of 12 per cent of the price as declared by the manufacturers in the invoice accompanying the said inputs and the credit of the deemed duty was determined shall be allowed to manufacturer of the final product. this credit should be utilised only towards payment of duty of excisable leviable under the said act on the said final product. it has been further mentioned that the goods are to be received directly from the manufacturer of the final product from the factory of the manufacturer of the said input under the cover of an invoice declaring the the appropriate duty of excise has been paid on such input under the provision of section 3a of said act. in view of above position of law, the deemed cenvat credit availed by the appellant cannot be denied. in view of above provision of notification no.29/2000-c.e.(n.t.) dated : 31.3.2000, the deemed cenvat was admissible to the appellant when they purchase the material from a manufacturer who had been paying the central excise duty under the compounded levy scheme. there having no dispute regarding the payment of duty during march 2000 and receipt of materials in april 2004, the credit cannot be denied. the provisions contain in the notification no.29/2000-c.e. (n.t.) dated 31.3.2001 were transitory in nature and remain effective from the first day of april 2000. the appellant also received the goods during this period. therefore the appellant is entitled in view of the above clear position of law the deemed cenvat credit availed of by the appellant at the rate of 12 per cent cannot be denied. similar view was expressed in case of the inputs lying in the stock with rerolling mills as on 31.3.2000 in case of j.m.g. steel private ltd. v. cce, patna. in view of above discussions, the appeal deserves to be allowed.5. consequently i set aside the impugned order and allow the appeal with consequential benefit to the appellant.

Judgment:
1. Heard Shri B N Chattopadhyay, Consultant for Appellant and Shri K K Sanyal, JDR for Respondent.

2. Ld. Consultant submits that the appellant are engaged in the manufacture of "M.S. Twisted Bars" falling under sub-heading No.7214.90 of C.E.T.A. Act, 1985. They were under Compound Levy Scheme during the period from September 1997 to March 2000. After withdrawal of the Compound Levy Scheme w.e.f. 01.04.2000 the appellant availed of Modvat credit on the inputs which was cleared from the factory of the manufacturer prior to 1.4.2000 and received by the appellant during the period from 1.4.2000 to 30.04.2000. They availed of the deemed CENVAT credit of Rs. 2, 38,207.56 on 176.450 metric tones of inputs M.S ingots. The Department disputed availing of the credit by the appellants and proceedings were initiated. They allege that the credit taken by the appellants was not proper. The appellants in their reply dated 12.2.2001 to the show cause notice claimed that they were eligible to have the benefit of deemed CENVAT credit received by them and cleared from the factory of the manufacturers in March 2000 and received by them during the month of April 2000. The Assistant Commissioner confirmed the demand of duty of Rs. 1, 05, 870.06 and imposed a penalty of Rs. 25,000/- on the appellants under Rule 173Q of Central Excise Rules, 1944 and interest was also charged under Section 11AA of Central Excise Act, 1944. The Commissioner (Appeals), Patna confirmed the demand. Ld. Consultant submits that the appellants purchased the goods from the manufacturer who had been paying Central Excise duty under Compounded Levy Scheme. The goods were cleared from the factory of the manufacturer during March 2000 when the Compounded Levy System was in vogue. Notification No. 29/2000-CE (NT) dated 30.03.2000 was issued to enable the manufacturers to avail credit on the goods manufactured up to 31.3.2000 and cleared from 1.4.2000 to 30.4.2000. Therefore he submits that the appellants were eligible to have the benefit of deemed Cenvat credit on the inputs at the rate of 12 per cent adveloram when purchased directly from the manufacturers working under the provisions of Compounded Levy System under Notification No. 58/97 dated 30.8.97 as amended. Deemed Modvat credit was also admissible on the inputs purchased from manufacturers working under Compound Levy Scheme. He submits that the Commissioner (Appeals) failed to appreciate that the appellant purchased inputs viz. M.S.Ingots from the manufacturers who had delivered the goods from their factory during the month of March 2000 when the Compound Levy System was in vogue. The goods, however, were received by them in April 2000 and they were eligible to have the benefit of deemed credit by virtue of Notification No. 29/2000. Therefore he submits that the appeal may be allowed and the deemed credit may be allowed to the appellant. He relies on the decision rendered in the case of J.M.G. Steel (P) Ltd. v.CCE, Patna 3. Ld. JDR supports the impugned order. He submits that the benefit of Notification No.29/2000-C.E. (NT) was not available to the appellant.

The appellant under Rule 57AB is entitled to have Cenvat credit equal to the amount of duty supplied by the inputs i.e. M.S. Ingots which was fixed at the rate of 750 per metric tone. Therefore he submits that he appeal may be rejected.

4. The contention of the ld. Commissioner that because of the fact that the manufacturers did not discharge their duty liability as per the capacity of production fixed by the Commissioner and M.S. Ingots had suffered duty as per the rate fixed under Rule 96ZO(1) at the rate of 750 per metric tone and the appellant was entitled to have the credit equal to the amount of the duty suffered by the inputs i.e. M.S. Ingots is entirely erroneous. The manufacturers no doubt had paid the duty under Compounded Levy Scheme ad paid the duty under provisions of Rule 96ZO(1) when the duty was paid at the rate of 750 per metric tone as fixed under the Rule 96ZO(1) of the Central Excise Rules, 1944. They paid the duty under Compounded Levy System. It cannot be said that the manufacturer of the ingots did not pay the duty under the Compounded Levy System. The observation is contrary to fact. Thee is no dispute that the goods were cleared from the manufacturer who had been working under the provisions of Compounded Levy System. Therefore they are eligible to have the benefit of deemed Cenvat credit under the provisions of erstwhile Notification No. 58/97-C.E.(N.T.). It has been envisaged that the duty of excise under the Central Excise Act, 1944 shall be deemed to have been paid on the inputs mentioned in the said notification and the same should be equivalent an amount calculated at the rate of 12 per cent of the price as declared by the manufacturers in the invoice accompanying the said inputs and the credit of the deemed duty was determined shall be allowed to manufacturer of the final product. This credit should be utilised only towards payment of duty of excisable leviable under the said act on the said final product. It has been further mentioned that the goods are to be received directly from the manufacturer of the final product from the factory of the manufacturer of the said input under the cover of an invoice declaring the the appropriate duty of excise has been paid on such input under the provision of Section 3A of said act. In view of above position of law, the deemed Cenvat credit availed by the appellant cannot be denied. In view of above provision of Notification No.29/2000-C.E.(N.T.) Dated : 31.3.2000, the deemed Cenvat was admissible to the appellant when they purchase the material from a manufacturer who had been paying the Central Excise duty under the Compounded Levy Scheme. There having no dispute regarding the payment of duty during March 2000 and receipt of materials in April 2004, the credit cannot be denied. The provisions contain in the Notification No.29/2000-C.E. (N.T.) dated 31.3.2001 were transitory in nature and remain effective from the first day of April 2000. The appellant also received the goods during this period. Therefore the appellant is entitled in view of the above clear position of law the deemed Cenvat credit availed of by the appellant at the rate of 12 per cent cannot be denied. Similar view was expressed in case of the inputs lying in the stock with rerolling mills as on 31.3.2000 in case of J.M.G. Steel Private Ltd. v. CCE, Patna. In view of above discussions, the appeal deserves to be allowed.

5. Consequently I set aside the impugned order and allow the appeal with consequential benefit to the appellant.