ORDER
G.A. Brahmadeva, Member (J)
1. This is an appeal preferred against the Order-in-Original No. 7-Addl. Collr./1988 dated 31-5-1988 passed by the Additional Collector of Central Excise, Meerut (U.P.).
2. The point to be considered in the present case is whether the appellants are entitled to deemed MOD VAT credit in respect of inputs, such as, waste iron and steel scraps in terms of Government of India, Ministry of Finance (Department of Revenue) F. No. R.22/5/86-TRU, dated 7-4-1986 issued by the Government of India under Rule 57G(2) of the Central Excise Rules, 1944.
3. The Adjudicating Authority passed the impugned order disallowing the credit of Rs. 1,78,729.50 Paise taken during the month of July, 1986. Further he raised a demand for a sum of Rs. 88,915.05 Paise on account of clearance of 282.27 MT of Steel Ingots cleared by the appellants during the month of July, 1986 against the debit entries made by the appellants in their Modvat Credit Account. Penalty of Rs. 20,000/- was also imposed on the appellants for irregular availment and utilisation of credit.
4. Shri H. P. Arora, learned Advocate, appearing for the appellants, submitted that the impugned order is bad in law in view of the clear directions of the Government of India vide letter dated 7-4-1986 deeming iron and steel scrap available in the market as duty paid and allowing the purchaser/manufacturer therefor to take credit at a certain rate without production of duty paying documents. He submitted that this issue was squarely covered by a series of decisions of this Tribunal including the latest decision in the case of Collector of Central Excise, Chandigarh v. Electrical Switchgears (P) Ltd. and Ors., reported in 1990 (27) ECR 398.
5. On the other hand, Shri S. K. Sharma, learned J.D.R. appearing for the revenue while reiterating the contentions of the Department, submitted that under declaration dated 7-4-1986 no MODVAT credit is permissible if input are clearly recognizable as being non-duty paid or charged to Nil rate of duty. He said that no doubt that this issue is covered by the earlier decisions of this Tribunal but it could be distinguished in view of the findings given in the impugned order that letter dated 7-4-1986 issued by the Government of India does not cover this waste and scrap and further Heading No. 72.03 covers only fresh scrap of Iron or Steel which arises in the Steel Plants and which is required to pay duty under Heading No. 7203.10 and 7203.20.
6. We have considered the arguments advanced on both sides and perused the records including earlier decisions of the Tribunal on this issue. On going through the decisions, we are convinced that this issue was well considered and covered by the earlier decisions. Since then the Tribunal has taken a consistent view holding that the goods purchased in the open market are deemed to be duty paid and the MODVAT is permissible as per directions of the Government of India dated 7-4-1986 issued in terms of proviso to Rule 57G(2) which clearly entitles the manufacturer/purchaster of inputs (waste and scrap of Iron and Steel) in the open market to take MODVAT credit at the minimum rate prescribed without production of documents evidencing payment of duty. Further, this issue was dealt with in detail in the ease of Collector of Central Excise, Chandigarh v. Mittal Metal Industries and Ors., as per Order Nos. A/538 to 542/90-NRB dated 20-12-1990 1991 (54) ELT 290 (Tri.) wherein it was held that the goods purchased in the open market are deemed to be duty paid and onus of proof lies on the Department to prove that the goods were not duty paid. In the present case also the Department has not produced any evidence to prove that inputs arc non-duty paid. Under these circumstances, following earlier decisions of this Tribunal on this issue, we hold that the appellants are entitled to take deemed Modvat credit as per letter dated 7-4-1986.
7. In the view we have taken, we set aside the impugned order and accordingly, the appeal is allowed with consequential relief.