MONNET ISPAT LTD. Vs. CCE, RAIPUR

JUDGEMENT

(1.) THIS appeal filed by the assessee is against an order passed by the Commissioner of Central Excise in adjudication of numerous show -cause notices issued to the appellants proposing to disallow Modvat credits under Rule 57A/57Q on one ground or the other for the period, October 1997 to May 1999. The Commissioner has disallowed Modvat credits totaling to Rs. 3,41,007.52 and imposed a penalty of Rs. 15,000/ -. Examined the records. Out of the aforesaid total credit of Rs. 3,41,007.52, a credit of Rs. 1,23,061/ - was denied on certain capital goods which the assessee had received in their factory during August 1997. In so denying the credit, the Commissioner recorded a finding that the appellants were working under the Compounded Levy Scheme under Section 3A of the Central Excise Act during the material period and hence not entitled to capital goods credit. The rest of the Modvat credit was denied on inputs on one or the other ground. A credit of Rs. 42,901/ - taken on Boric Acid was denied on the ground that this item was not an eligible input under Rule 57A. Another credit of Rs. 1,62,236/ - taken on HR Sheets was also disallowed on similar grounds. A credit of Rs. 8,666/ - which was taken by the assessee on 30.3.1999 on the strength of invoice dated 8.10.1998 issued by M/s Hindustan Petroleum Corporation Ltd. (HPCL) from their depot covering certain inputs received earlier in the assessee's factory on 11.9.1998 was denied on the ground that the credit was taken after a period of six months from the date of receipt of the goods. Lastly, a credit of Rs. 4,143/ - which the appellants had taken on Pig Iron supplied by registered dealers of M/s Visakhapatnam Steel Plant was disallowed on the ground that the input -manufacturers had paid duty on the goods at a higher rate than what they were liable to and consequently the appellants had taken Modvat credit on the goods to a higher extent than what they were entitled to. The Steel Plant (Pig Iron manufacturers) had paid duty @ Rs. 600/ - PMT and this had been passed on by them through their registered dealers to the appellants. They ought to have paid duty @ 15% ad valorem under the appropriate Tariff heading and, if they had paid duty at such rate, it would have been less by Rs. 4,143/ - than the duty which they had actually paid @ 600/ - PMT. The Commissioner disallowed Modvat credit on Pig Iron to the extent of Rs. 4143/ - taken in excess over 15% ad valorem. In the present appeal, the assessee has challenged the decision of the Commissioner on a variety of grounds.

(2.) HEARD both sides. Reiterating the grounds of the appeal, ld. Advocate Shri K.K. Gupta submits that, during the material period, the appellants were engaged in the manufacture of ingots of non -alloy steel falling under Chapter Sub -Heading 7206.90 of the Schedule to the Central Excise Tariff Act and the said goods were specified final products under Rule 57Q by virtue of Clause (iii) in column 3 against Sr. No. (1) of the Table annexed to Sub -rule (1) of the rule. The appellants had paid duty on their product during the said period under Section 3 and not under Section 3A of the Central Excise Act as they were not covered under the Compounded Levy Scheme of the latter Section. At no point of time had the Commissioner determined the annual capacity of production (ACP) of the appellants under Section 3A. The appellants had paid duty on their product only in terms of Section 3 of the Central Excise Act. Ingots of non -alloy steel falling under CSH 7206.90 manufactured in the induction furnace unit of the appellants, on which duty was paid under Section 3 (and not under Section 3A) of the Central Excise Act, were specified final products under Rule 57Q. Ld. counsel further points out that the Compounded Levy Scheme for manufacturers of MS Ingots was notified for the first time by the Central Govt. by way of Notification No. 30/97 -CE(NT) dated 1.8.1997. The date on which the scheme was intended to commence was postponed to 1.9.1997 under Notification No. 43/97 -CE(NT) dated 30.8.1997. Counsel has particularly referred to clauses (a) & (e) of the Explanation under Notification No. 30/97 -CE(NT) as amended by Notification No. 43/97 -CE(NT). As per Clause (a), nothing contained in the Notification was applicable to MS Ingots manufactured or produced prior to the first day of Sept. 1997 and cleared on or after that date. Therefore, for the month of August 1997, the Compounded Levy Scheme was not applicable to the appellants. As per Clause (e), the scheme was not applicable to an integrated steel plant which manufactured or produced ingots starting from the stage of iron ore within the same premises. Theirs was an integrated steel plant. Therefore, by virtue of both Clause (a) & (e) the Compounded Levy Scheme envisaged under the aforesaid Notifications was not applicable to the appellants during Aug. 1997. Counsel submits that the denial of Modvat credit of Rs. 1,23,061/ - taken on capital goods during Aug. 1997 on the basis of the finding (recorded by the Commissioner) that the appellants were working under the Compounded Levy Scheme under Section 3A is not sustainable in law.

(3.) LD . JDR Shri S.C. Pushkarna reiterates the findings of the Commissioner as contained in the impugned order.