ORDER
S. Kalyanam, Member (J)
1. This appeal is filed by the Department and is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 17-6-1988 reversing the order of the Assistant Collector of Central Excise, Mysore, dated 5-12-1987.
2. The short question that arises for consideration in the appeal is as to whether the respondent herein would be entitled to take deemed credit in respect of the “steel melting scrap” purchased by them from the market for the period 1-3-1986 to 28-8-1986 after steel melting scrap came to be exempted from payment of duty under Notification 54/86, dated 10-12-1986.
3. Shri Jayaseelan, the learned D.R., contended that once the inputs became exempted by virtue of the notification in question the respondent would not be entitled to take deemed credit unless they prove that the goods had suffered duty. The learned D.R. further submitted that in the context of the issuance of the notification the onus would automatically shift on to the assessee to prove that the goods had suffered duty.
4. Heard Shri Ganesan, the learned counsel for the respondent.
5. We have considered the submissions made before us. We take note of the fact that the Government of India issued an order under Rule 57G dated 7-4-1986 permitting deemed credit in respect of the goods in question unless the goods are clearly recognisable as non-duty paid. It is well-settled that onus is on the Department to prove that the goods are clearly recognisable as non-duty paid as envisaged by the said order of the Government of India. The plea of the learned D.R. that merely because of the exemption notification the onus would shift on to the respondent or the deemed credit would not be available cannot be accepted, because admittedly the notification itself is a conditional notification. We also take note of the fact that the statutory order issued by the Government of India under Rule 57G on 7-4-1986 permitting deemed credit in respect of the goods purchased in the market, such as the one with which we are concerned in the case, was issued subsequent to the Notification 54/86, dated 1.0-2-1986. If the contention of the learned D.R. were to be accepted no purpose would be served by the Government issuing a statutory order granting the deemed credit in respect of market purchases of steel scrap. Therefore, adopting the reasoning in the impugned order, we hold that the onus is on the Department to establish that the steel scraps arc clearly recognisable as non-duty paid to dis-cntitle the respondent from availing deemed MODVAT Credit and the onus not having been discharged and the respondent’s plea that the goods were purchased in open market not having been rebutted by any acceptable evidence, we uphold the impugned order and dismiss the appeal.
V.P. Gulati, Member (T)
6. I agree. I observe that the learned lower authority allowed the benefit of deemed MODVAT Credit in terms of Government of India’s statutory order No. 332/30/87-TRU dated 7-4-1986. Under this order the Government of India has directed that deemed credit of Rs. 365 per metric ton should be allowed in the case of iron and steel scrap purchased from the market if it is not clearly recognisable as non-duty paid. The plea of the Revenue is that inasmuch as under Notification 54/86, dated 10-2-1986 iron and steel scrap is exempted from payment of duty it should be deemed that all the scrap purchased from the market would be non-duty paid and, therefore, in that view of the matter the burden is on the respondent to show that the same had suffered duty. In the grounds of appeal the learned Collector has urged that the Notification 54/86 has a very wide coverage and the steel scrap in respect of which deemed credit was taken was clearly recognisable as chargeable to NIL rate of duty and even imported scrap available in the market is also fully exempted. He, however, submitted that there is no channel through which iron and steel scrap is received in the market on payment of duty. At the outset we are not able to appreciate the reasoning in regard to the plea of the learned Collector that there is no channel through which iron and steel scrap is received in the market on payment of duly. It may be seen that the Notification 54/86 came to be issued on only 10-2-1986 and the scrap as it is in the market could be pertaining to the period before to 10-2-1986. The Government of India chose to issue the order extending the facility of deemed MOD VAT credit on 10-4-1986 much after the issue of the notification. It has to be presumed that the Government of India was aware of the conditions in the trade in regard to iron and steel, and took the conscious decision taking into account the realities of trade at the relevant time that MODVAT Credit could be given to the scrap. As it is Notification 54/86 is a conditional notification and covers the scrap which has arisen out of the duty paid materials falling under certain tariff headings. It cannot be said that it is of such wide import that it covers all types of iron and steel scrap that will be arising in the course of manufacture. There is nothing in the order of the learned original authority or in the grounds of appeal to say that the nature of scrap is such that it can be contended that this is covered by the Notification 54/86. In the face of that it cannot be accepted that just because Notification 54/86 was in existence the statutory order of Government of India can be taken to have become superfluous, as pleaded by the learned D.R., more so when the same had been issued at a later point of time to the issue of the Notification. The intention of the Government was clearly to extend the facility to the trade in view of the non-availability of duty paid documents in respect of the scrap which was floating in the market and that the benefit should not be denied for that reason and therefore the scrap should be treated as duty paid scrap. The Revenue wants the respondents to produce evidence that the goods were not duty-paid. This would be an invidious burden placed on the assessee when there is no such stipulation in the order of the Government of India. The mention that the deemed Modvat credit would be available unless it can be shown that the same was clearly non-duty paid only goes to show that the MODVAT credit should be denied only in such circumstances where there is a direct evidence to show that the scrap had not suffered any duly. Such a contingency would be when the scrap has emanated from a factory or a manufacturing unit. We had asked the learned D.R. as to what type of document he would expect from the assessee to prove that the item that he has purchased from the market, where the traders are selling the goods, are duty paid. He had nothing specific to say in this regard. We in view of the above, therefore, hold that the learned lower appellate authority has rightly allowed the benefit of deemed MODVAT credit to the respondents and dismiss the Revenue’s appeal.