LEADER ENGINEERING WORKS Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) BY the present appeal, the appellants has assailed the order dated 27th September, 1991 of the Collector, Central Excise (Appeals). The Collector (Appeals), in his order, has held :

(2.) THE facts of the case, in brief, are that the appellants are engaged in the manufacture of valves and cocks. They were availing the benefit of credit of duty under the Modvat scheme. During the course of checking of RT 12 return filed by the appellants for the months of April, 1989 to July, 1989 it was alleged that the appellants had wrongly availed the credit of duty paid on inputs in respect of foundry fluxes, Mata Powder and Suraj Resin to the tune of Rs. 21,502.07 and also availed credit of Rs. 8,247.53 in respect of copper scrap purchased from the manufacturers. Accordingly a show cause notice was issued to the appellants asking them to explain as to why the said amount of Rs. 29,749.60 availed by them be not demanded under Rule 57 -1 read with Section 11 A. The appellants contended that they submitted declarations under Rule 57G(2) on 26 -3 -1986, 1 -1 -1987, 4 -1 -1988 and 9 -3 -1988 for availing of the credit of duty of excise/additional duty paid on the inputs used in or in relation to the manufacture of the final product. The Department proposed to deny them the credit of duty against the inputs described as Recupex, Adeltox IV, Meltox, Silkot F, Ivalita, Mata Powder, Exmould -4, Silbond, Corefix, Core -joint, Sleeves, Ivaresin. It was argued that these items were used in or in relation to the manufacture of finished products. It was also contended by the appellants that without these particular items, the final product, namely, valves and cocks could not come into existence. The appellants also cited and relied upon the decision of the Collector, Central Excise (Appeals) in his Order Nos. 252 -255 -CE/CHG/88, dated 16 -6 -1988 wherein he had allowed the credit of duty paid on inputs in respect of the very same inputs in the petitioner's own case. It was argued by the appellants that expression used in or in relation to the manufacture of final products is very wide and encompasses the entire process carried on by the manufacturer. The appellants for this contention cited and relied upon the judgment of the Apex Court in the case of J.K. Cotton Spinning and Weaving Mills v. STO (16 STC 563). The various items on which the department proposed to deny the credit of duty against the inputs were described in detail by the appellants.

(3.) THE appellants also agitated the denial of deemed Modvat credit of Rs. 8,247.53 on the purchases of copper scrap and copper wire and aluminium ingots. The appellants argued that they had furnished the declaration claiming copper scrap/aluminium ingots as inputs and that the appellants were entitled to take/avail credit of duty against the receipt of scrap of copper/aluminium without the production of documents evidencing the payment of duty in terms of Central Government's Order dated 2 -11 -1987. It was argued by the appellants that there is no material on record to show that the copper scrap in question is clearly recognisable as being non -duty paid nor was there any mention in the show cause notice that credit under Rule 56A and 57A of the Central Excise Rules has been availed. The appellants therefore, argued that in the absence of such evidence, the appellants were rightly entitled to take Modvat credit. The Asstt. Collector, after considering their pleas and submissions disallowed the credit of Rs. 29,749.60 under Rule 57 -I read with Section 11A of the Central Excises and Salt Act, 1944. The Collector (Appeals) upheld the order of Asstt. Collector insofar as duty on copper scrap/wire/aluminium was concerned but set aside the order of the Asstt. Collector insofar as the other products were concerned.