ORDER
Jyoti Balasundaram, Member (J)
1. The above appeals arise out of a common order passed by the Collector of Central Excise (Appeals), Chandigarh and are being heard together and disposed of by this common order.
2. The facts of the case in brief are that the appellants are engaged in the manufacture of coated and uncoated steel wires falling under sub-heading No. 7217.90 of the Schedule to the Central Excise Tariff Act, 1985 and are availing the benefit of Modvat Scheme. On scrutiny of RT 12 returns for July, August, September and November, 1992, it was noticed that the appellants had taken Modvat credit of Rs. 84,386.60 P. on 91.725 MT of steel wire rods received under 11 GPIs issued by M/s. Modi Steels, Modi Nagar in the name of M/s. Modi Industries Ltd. (Steel Division) with further endorsement in favour of the appellants and out of these 11 GPIs, on the face of 10 GPIs, M/s. Modi Steels had given remarks regarding Rule 173-H and that Central Excise duty had already been paid by the party and on the remaining one GPI, in addition to remark of Rule 173-H, it had been mentioned that duty had been paid by M/s. Hindustan Wires Ltd., Faridabad.
3. During the scrutiny of RT 12 return for the month of December, 1992, it was noticed that the appellants had taken Modvat credit of Rs. 56,515. 40 on 61. 400 MT of steel wire rods received under 5 GPIs issued by M/s. Modi Steels in the name of M/s. Modi Industries Ltd. (Steel Section), Chandigarh stock yard with further endorsement in favour of the appellants without payment of Central Excise duty. On the face of 5 GPIs, M/s. Modi Steels had made the remark about Rule 173H and that Central Excise duty had already been paid by the various GPIs and on the remaining one GPI, apart from the remarks regarding Rule 173H, it had been mentioned that duty had been paid by M/s. Madhya Pradesh Iron & Steel Co., Malanpur (M.P.). While endorsing all the above GPIs in favour of the appellants, the Depot Incharge of M/s. Modi Industries (Steel Division), Chandigarh had noted on reverse of all the GPIs that the goods covered by the GPIs had been sold to the party and since the goods steel wire rods were sold and not returned after repairs etc. as provided under Rule 173-H, these could not be cleared at nil rate of duty and the appellants were not entitled to take Modvat credit on nil duty GPIs.
4. After issue of show cause notice, the Assistant Collector adjudicated the matter and confirmed the demands. The Collector (Appeals) upheld the orders of the Assistant Collector on the ground that the goods sent back could not be co-related with the goods sent out for re-conditioning etc. by the appellants and in the absence of co-relation, there was nothing to indicate that the goods which came back were the very same ones which had gone out after reversal of credit by the appellants. Hence this appeal.’
5. Shri V.K. Agarwal, learned Counsel for the appellants, submits that the goods admittedly came to the appellants from M/s. Modi Industries after discharging the duty liability, credit was taken by the appellants; that part of the quantity of inputs received were found defective and returned to M/s. Modi Industries by the appellants after they had reversed the credit entries. The same goods came back from M/s. Modi Industries and the only missing link was with reference to the original GPI issued by M/s. Modi Industries (when the goods were cleared by M/s. Modi Industries for the first time). However, the GPIs under which the goods were sent back to M/s. Modi Industries after reversal of credit, contained a reference to GPI under which the goods had come to the appellants. He therefore, submits that co-relation has been established by the appellants and therefore, credit should not have been denied to them for this reason.
6. The learned DR Shri Sethi reiterates the findings of the lower authorities.
7. On a consideration of submissions of both the sides and having regard to the relevant documents, for example, documents at pages 31,32 and 33 namely GPI 1380 dated 24-3-1992 issued by M/s. Modi Steels, Modinagar covering quantity of 10.640 MTs of steel wire rods, GPI No. 254 showing return of rejected steel rods from M/s. Modi Industries and GPI No. 2191 under which the goods came back to the appellants; Excise duty has already been paid on goods received back, I am satisfied that the appellants have been able to establish that the goods which were sent out by the appellants for reconditioning (after reversal of credit entries) were the same goods which had came to them earlier under GPI No. 1380. Same is the case with other consignments in Annexure to the show cause notice. This being the reason, there is no reason to disallow the credit and therefore, I hold that the appellants are entitled to avail Modvat credit on the entire quantity, set aside the impugned order and allow these two appeals.