DELHI STEEL INDUSTRIES Vs. CCE, CHANDIGARH

JUDGEMENT

(1.) THIS appeal filed by the assessee is against the order of the Commissioner (Appeals) denying them deemed Modvat credit under Notification No. 58/97 -CE, dated 30.8.1997 on certain inputs specified thereunder and supplied during the period January to March, 1998 by manufacturers working under the Compounded Levy Scheme of Rule 96ZP of the Central Excise Rules 1944 read with Section 3A of the Central Excise Act, 1944. Examined the records and heard both sides.

(2.) LD . Advocate, Shri J.P. Kaushik has reiterated the grounds of appeal. He submits that the requirement of payment of 'appropriate duty' by the input -suppliers, laid down in para -4 of the Notification, has to be interpreted as 'discharge of duty liability in terms of Rule 96ZP at the time of clearance of the goods' and not as full and final payment of duty as interpreted by the Commissioner (Appeals). The certificates issued by the Central Excise Range Officer having jurisdiction over the input -manufacturers stated that duty had been paid under Rule 96ZP(3) and, therefore, the condition laid down in para -4 of the Notification stood satisfied. Ld. Counsel further submits that any short -payment of duty by the input -manufacturers cannot be a valid ground for denial of the benefit of the Notification to manufacturers of final products, who receive the inputs from the input -manufacturers working under the compounded levy scheme. The provisions of the Notification should be interpreted in a manner which would not render the scheme of the Notification ineffective or redundant, argues the counsel. He further points out that, by Final Order No. A/509 -22/2000 -NB(DB), dated 13.6.2000, this Tribunal had directed the Commissioner of Central Excise, Chandigarh to redetermine the Annual Capacity of Production (ACP) of the aforenamed input -manufactures for the period 1997 -98. The certificates issued by the Central Excise Range Superintendent indicating short -payment of duty by the aforenamed input -manufacturers were all based on the Commissioner's order which was set aside by this Tribunal while passing the remand order. Ld. Counsel further submits that, as on the dates on which the said input -manufacturers had Issued the subject invoices to the appellants, they had paid appropriate duty of excise on the goods and that duty was mentioned by the Range Superintendent in his certificate, as "duty paid under Rule 96ZP(3)" Counsel submits that the duty paid by the input -manufacturers under Rule 96ZP(3) should be taken as 'appropriate duty' within the meaning of this expression in para -4 of the Notification. Accordingly, the appellants had satisfied the condition laid down in para -4 ibid. He, therefore, urges that the deemed Modvat credit in question be allowed. Ld. SDR reiterates the findings of the Commissioner (Appeals).

(3.) I have considered the submissions. The Modvat credit in question was taken on inputs specified in Notification No. 58/97 -CE dated 30.8.1997. It was taken on the strength of the invoices issued during the period January to March, 1998 by three manufacturers working under the Compounded Levy Scheme of Rule 96ZP read with Section 3A. Para -4 of the Notification required that the inputs should have been received directly by the manufacturers of the final products, from the factory of the manufacturers of the said inputs under the cover of an invoice declaring that the 'appropriate duty' of excise has been paid on such inputs under the provisions of Section 3A of the Act. There is no dispute, in the present case, of the fact that the inputs were received by the appellants directly from the input -manufacturers under the cover of the latter's invoice. The only objection, raised by the Department and upheld by the authorities below, is that the invoices did not declare that the appropriate duty of excise had been paid on the inputs under the provisions of Section 3A of the said Act. I find that, in the invoice dated 9.2.1998 issued by M/s. Baba Balak Nath Steel Pvt. Ltd., it was declared by them thus: "duty liability discharged under Rule 96ZP(3)". There is no dispute of the legal position that any discharge of duty liability under Rule 96ZP(3) is a discharge of duty liability under Section 3A of the Central Excise Act. Therefore, the invoice dated 9.2.1998 of M/s. Baba Balak Nath Steel Pvt. Ltd. satisfied the condition laid down in para -4 of the Notification and, accordingly, the deemed Modvat credit taken on the strength of the said invoice should be allowed to the appellants.