ORDER
P.G. Chacko, Member (J)
1. These 41 appeals filed by the Department are against the common order dated 16-2-1999 passed by the Commissioner (Appeals) in appeals filed by different assessees against orders of adjudication passed by the jurisdictional Assistant Commissioners of Central Excise. Since a common issue is involved, all these appeals are being disposed of by a common order.
2. The respondents in these appeals were engaged in the manufacture of steel ingots falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985 and were availing the facility of Modvat credit on inputs under Rule 57A of the Central Excise Rules during the respective periods of dispute. They took Modvat credit of the duty paid on the defective/rejected ingots received as inputs for the manufacture of alloy/non-alloy steel ingots (final products). They did so without filing D-3 declaration with the jurisdictional Central Excise Range Officers as required under Trade Notice No. 20/CE/93, dated 29-10-1993 of the Commissioner of Central Excise, Chandigarh, which had been issued under Rule 233 of the Central Excise Rules. The jurisdictional Assistant Commissioners by their respective orders of adjudication disallowed the credit so taken, on the ground of non-fulfilment of the requirements of the said Trade Notice. The aggrieved assessees went in appeal before the Commissioner (Appeals) and the latter passed the impugned order, following the Tribunal’s decision in the case of CCE, Chandigarh v. Didar Steel Complex (P) Ltd. [1997 (96) E.L.T. 691 (T)] and holding that benefit of Modvat credit under Rule 57A ibid could not be disallowed on the ground of non-observance of instructions contained in the aforesaid Trade Notice which had no statutory force. The Commissioner (Appeals), however, upheld the penalties imposed by the adjudicating authorities.
3. In the instant appeals against the order of the Commissioner (Appeals), the Department has principally contended that the lower appellate authority, while considering the Trade Notice, failed to take note of the Honourable Supreme Court’s ruling in the case of Indian Aluminium Co. Ltd. v. Thane Municipal Corporation [1991 (55) E.L.T. 454 (S.C.)] to the effect that non-observance of even a procedural condition was not to be condoned if likely to facilitate commission of fraud and introduce administrative inconvenience. The Department’s further contention is that the Trade Notice issued under Rule 233 is also a part of the Central Excise Rules and therefore the Supreme Court’s ruling squarely covers the instant case of non-fulfilment of the requirements of the Trade Notice. The ld. DR Shri A.K. Jain reiterates the grounds of appeals and submits that the Trade Notice was issued by the Commissioner of Central Excise, Chandigarh in exercise of his powers under Rule 233 in order to obviate any chance of commission of fraud and of introduction of administrative inconvenience in matters relating to availment, by assessees, of the Modvat benefit on the particular inputs. According to him, in such circumstances, non-compliance with the conditions laid down under the Trade Notice should be visited with penal consequences, apart from denial of Modvat credit as per the ruling of the Honourable Supreme Court in the case of Indian Aluminum Co. Ltd. (supra). The ld. DR has gone a step further and made the proposition that any instructions issued under Rule 233 would ‘merge’ with the Rules and would therefore have the same force of law as the Rules themselves have. The ld. DR has also relied on the decision of the Tribunal’s Larger Bench as contained in Final Order No. A/136-42/2000-NB, dated 21-2-2000 [2000 (117) E.L.T. 571 (T)] in the case of CCE v. Avis Electronics Pvt. Ltd. and Ors., wherein the Tribunal held that when a particular thing was directed to be performed in a manner prescribed by Rules it should be performed in that manner itself and not otherwise. The reliance placed by the ld. DR on this decision of the Tribunal appears to be based on a premise that the provisions of the Trade Notice are as good as Central Excise Rules. The ld. DR has further contended that, in the case of Didar Steel Complex (supra) relied on by the lower appellate authority, the Hon’ble Supreme Court’s ruling in the case of Indian Aluminum Co. Ltd. (supra) was not considered and therefore the ratio of Didar Steel Complex should not be followed. The ld. DR has therefore prayed for setting aside the order of the Commissioner (Appeals).
4. Some of the respondents, who are not present, have requested for a decision on merits while the other respondents are represented by Counsel. Ld. Counsel have opposed the submissions of the DR by submitting that the issue involved in the instant appeals is squarely covered in favour of the assessees by the decision of the Tribunal in the case of Didar Steel Complex (supra) followed by the decision of the Tribunal in the case of CCE v. J.S. Khalsa Steels Pvt. Ltd. as per Final Order No. A/1011/99-NB (DB), dated 1-11-1999. Ld. Counsel have also pointed out that, to the best of their knowledge, the Department has not appealed against the Tribunal’s decision in the case of Didar Steel Complex and that their (Department’s) reference application in the said case was rejected by the Tribunal as per the order reported in 1997 (96) E.L.T. 691 (T). Counsel have also pointed out that the subject Trade Notice stipulated certain conditions which were in vogue when the proforma credit scheme (precursor of the Modvat scheme) was in force and that such conditions were done away with under the Modvat scheme. Counsel have, therefore, argued that the Department wanted to introduce the abandoned conditions into the Modvat scheme by way of the Trade Notice, which, according to the Counsel, was beyond the powers of the Central Excise Commissioner under Rule 233 of the Central Excise Rules. The said Rule 233 only provides for supplemental instructions which can not in any way affect the substantive rights of the assessees under the Modvat rules, according to the ld. Counsel. Counsel have therefore prayed for dismissal of the Department’s appeals.
5. I have carefully examined the impugned order and connected records of the case. I have also considered the rival submissions on facts and the case law cited.
6. I note that, in the instant cases, it is admitted position that the respondents took Modvat credit on defective/rejected steel ingots, that such inputs were received in their factory and remelted by them and that they manufactured their final products viz. alloy/non-alloy steel ingots out of such remelted goods inasmuch as the lower appellate authority’s findings of facts to this effect are not disputed in the appeals before me. There is, again, no dispute that the defective/rejected ingots were eligible inputs for Modvat credit under Rule 57A. The only dispute is with regard to procedural requirements stipulated by the Chandigarh Central Excise Commissioner in the subject Trade Notice. This aspect of the matter has already been considered by the Tribunal (Single Member Bench) in the case of Didar Steel Complex Pvt. Ltd. (supra), which has been followed in a similar case by the Tribunal (Two Member Bench) in the case of C.C.E v. J.S. Khalsa Steel Pvt. Ltd (supra). I would follow the ratio laid down by the Tribunal in Didar Steel Complex Pvt. Ltd. as followed in J.S. Khalsa Steel Pvt. Ltd.
7. The Honourable Supreme Court’s ruling in the case of Indian Aluminum Co. Ltd. cited by the ld. DR has been considered. That ruling is applicable to a situation where there is a possibility of fraud or administrative inconvenience being occasioned by the assessees’ conduct in the context of availment of Modvat credit. It is noted that there is no iota of challenge in the instant case against the bona fides of the conduct of the parties in availment of Modvat credit. Neither any fraud nor any act prejudicial to administrative convenience has been alleged by the Department in the present appeals, nor could I find any allegation to that effect in the show cause notices issued to the various parties, nor any finding to that effect in any of the orders of adjudication of the Assistant Commissioners. I am, therefore, unable to apply the Hon’ble Supreme Court’s ruling cited by the ld. DR to the facts of the present cases. The submission of the ld. DR that the instructions contained in the Trade Notice are as good as Rules is also not acceptable since the settled position of law on the point is to the contrary.
8. The ld. DR has, further, drawn my attention to Rule 173H of the Central Excise Rules wherein certain conditions to be fulfilled by the assessees to the satisfaction of the Commissioner has been laid down. He has, further, referred to Rule 173A which says that the provisions of Chapter VII-A (which includes Rule 173H) would prevail over Rules in other Chapters of the Central Excise Rules in case of any conflict between the two. The tenor of the ld. DR’s submission is that the conditions stipulated under Rule 173H should also be read into Modvat rules. I am unable to accept this proposition for reasons already discussed.
9. In view of the above observations and findings, I do not see any reason to interfere with the order of the Commissioner (Appeals). The Department’s appeals are devoid of merit and are therefore rejected.