BIRLA VXL LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The appellants herein are engaged in the manufacture of woollen and man -made silk fabrics and they sell their products in the domestic market and also export their products. They import raw material under the VBAL as well as under OGL Scheme for the manufacture of their final products. Show cause notice was issued on the ground that in June 1995, they availed Modvat credit of Rs. 11,91,136/ - on invoices issued by M/s. Wellman Hindustan Ltd. and Modern Woollen Mills who had undertaken job work for them for the manufacture of wool tops out of greasy wool imported by the appellants under VBAL. In reply, the appellants contended that the raw material on which credit had been taken and on which credit was sought to be disallowed, had been imported under the OGL scheme under which there was no bar to availment of Modvat credit of duty paid on inputs. Before the Additional Commissioner, they produced Bills of Entry and corresponding invoices of job workers to co -relate the raw materials imported under OGL and the goods made out of such imported inputs. The adjudicating authority dropped the demand holding that there was no contravention of the provisions of Notification 203/92 -Cus., dated 19 -5 -1992 as credit was not availed on inputs imported under VBAL scheme. This order was reviewed and the appeal filed to the Commissioner (Appeals) who vide the impugned order, held that there was no force in the plea of the importers that the imported material being under OGL, was eligible for availing credit and allowed the Revenue's appeal on the ground inter alia that the importers did not reverse the credit taken on the 8 invoices in dispute in the present case and in addition to directing recovery of credit with interest, he also imposed penalty of equal amount under Section 11 AC of the Central Excise Act.

(2.) We have heard both the sides. The Department has not produced any material on record to establish that the raw material imported under OGL on which credit was taken were used in the manufacture of goods exported by the appellants under the VBAL Scheme. The burden cast upon the Revenue has not been discharged and the burden is being sought to be shifted on to the importers. Unless the Revenue is able to show that the modvated inputs were used in the manufacture of products exported under VBAL, the appellants cannot be called upon to reverse the credit taken by them. The case of the Revenue fails as unsubstantiated. We, therefore, hold that the appellants are eligible to the credit taken by them and accordingly set aside the impugned order and allow the appeal.