RALLIWOLF LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) After hearing Shri Manoj Sanklecha appearing along with Shri B. Devdas, advocates for the applicants and Shri B.K. Choubey, JDR for the Revenue, we take up the appeal for final disposal.

(2.) The appellants availed of the deemed credit facility given by two orders of the Ministry in terms of Rule 57G(2) of the Central Excise Rules. A number of show cause notices were issued alleging that since the deemed credit was availed on aluminium alloy ingots, which were exempted in terms of Notification 180/88 -CE as amended, the goods were shown to have been clearly recognizable as non -duty paid. Nine show cause notices totally involving deemed credit of Rs. 18,33,716 were adjudicated upon by the Assistant Commissioner in his single order. Placing reliance on the Tribunal judgment in the case of CCE v. Kapsons Electro Stampings and Arun Auto Spinning and Mfg. Co. v. CCE , he dropped the proceedings. At the behest of the jurisdictional Commissioner, the Assistant Commissioner made an application to the Commissioner (Appeals) to examine the legality of his order. The Commissioner observed that the adjudicating authority had neither satisfied himself that the condition had been fulfilled nor had he caused any enquiry. On this ground he set aside the order and remanded the proceedings for de novo consideration. Against this order, the present appeal has been filed. An application was made for stay of the operation of the impugned order. On the observation that no useful purpose would be served by granting stay, we proceed to finalize this appeal.

(3.) The leading judgment on this issue was of the Larger Bench of the Tribunal in the case of Machine Builders v. CCE in which cognizance was taken of both the judgments on which reliance was placed by the Assistant Commissioner. In para 23 of the said judgment which is reproduced below, the Tribunal had did down the efforts to be undertaken by the Revenue in determining the eligibility of the assessee to avail of the benefit of this notification. The mere existence of an exemption notification is not sufficient to shows that the input is wholly exempt from duty or clearly recognized as not being duty paid or charged to nil rate of duty. This consequence may automatically follow in the case of unconditional exemption once it is shown that the inputs in question are attracted by the notification. In the case of conditional exemption, unless it is shown that all the conditions are satisfied in a given case, it cannot be stated with certainty that the inputs are wholly exempt or are clearly recognizable as non -duty paid or charged to nil rate of duty. It is therefore for the Revenue by conducting necessary enquiry (and it shall be the duty of the assessee to cooperate) to see if the conditions are satisfied and the exemption notification has fully taken effect in regard to the inputs in question. Revenue cannot be heard to say that it is for the assessee to show that the conditions are not satisfied and since he had failed to do so, the exemption must be regarded as having taken effect. It has to be appreciated that in the generality of such cases, the person who clears the inputs is not the assessee, but the manufacturer of the inputs and the assessee might not have purchased the same directly from the manufacturer but might have purchased from the Bazar. When the controversy arises in the appellate forum it is for the Revenue to satisfy the appellate forum that the conditions are satisfied in the given case and that the redemption has taken effect.