For raising demand in respect of deemed credit, onus lies on the department to prove non-duty paying character on inputs.

PJ/Case Laws/2012-13/1500

Case:- STEEL AUTHORITY OF INDIA LTD. V/s COMMISSIONER OF C. EX., BOLPUR

Citation:- 2013 (289) E.L.T. 55 (Tri.- Kolkata)

brief Facts:-The Department initiated proceedings against the Applicant on the ground that the Applicant availed the deemed Credit on Aluminium Shots, Cubes and Starts during period from March, 1986 to February, 1991 on the ground that the Applicant could not produce any tangible evidence of duty paying character of the inputs on which they have taken the deemed credit. The Applicant filed this Application for waiver of deposit of MODVAT Credit of Rs. 71,28,091/- under Rule 57-I of the erstwhile Central Excise Rules, 1944 and equal amount of penalty under Rule 173Q(1)(bb) of the erstwhile Central Excise Rules, 1944.

Appellant Contentions:-The contention of the Applicant is that the facility of deemed Credit is available with certain exception i.e. the benefit would not be available, if such inputs are clearly recognizable as non-duty paid. However, the onus will continue to lie on the Department to prove the case of otherwise. The contention is that the Department sought to deny the facility on the ground that the impugned inputs are exempted, vide Notification No. 182/84, as amended. The contention is that the aforesaid Notification is conditional and not unconditional and in this situation, even if the goods had not suffered duty, the onus still continues to lie with the Department. In support, the Applicant have placed reliance on the decision of the Hon'ble High Court of Punjab and Haryana in the case of CCE, Chandigarh v. Khalsa Charan Singh and Sons reported in 2010 (255) E.L.T. 379 (P & H), following the earlier decisions of the Tribunal in the case CCE v. Balaji Alloys & Castings Pvt. Ltd. reported in 1994 (69) E.L.T. 783 (Tri.) and Maharashtra Metal Powders Pvt. Ltd. v. CCE reported in 1996 (87) E.L.T. 87 (Tri.) and the decision of the Hon'ble High Court of Punjab & Haryana in the case of CCE v. Emdet Engineers Pvt. Ltd. reported in 2010 (253) E.L.T. 756 (P & H).

Respondent Contentions:-The Revenue reiterates the findings of the learned Commissioner (Appeals). The contention of the learned AR is that even if the Applicant are able to make out a prima facie case in their favour, as per decision of the Hon'ble High Court of Andhra Pradesh in the case of CCE, Guntur v. Sri Chaitanya Educational Committee reported in 2011 (22) S.T.R. 135 (AP), the balance of convenience has to be seen and the balance of convenience in this case is in favour of the Department. The financial hardship has also to be seen. He has placed reliance on the decision of the Hon'ble Andhra Pradesh High Court in the case of SQL Star International Ltd. v. CC, Hyderabad reported in 2012 (276) E.L.T. 465 (AP).

Reasoning of Judgment:-We have considered submission from both sided parties. Undisputedly, this is a case of deemed Credit, and the benefit can be denied only under the exceptional categories. Prima facie, we find that the Department could not show that the Applicant's case falls under the exceptional categories. Further, the Department challenged to deny the benefit to the Applicant on the ground that the inputs are exempted vide Notification No. 182/84- C.E., as amended. The aforesaid Notification is conditional Notification and not unconditional, therefore, the onus would continue to lie on the Department to show that the inputs in this case are clearly recognizable as non-duty paid. We find that the Department could not produce any document showing that the goods were charged to nil rate of duty or had been cleared without payment of duty or were exempt. On the other hand, proceedings were initiated against the Applicant on the ground that the Applicant could not produce any tangible evidence in their support, that the goods are clearly non-duty paid. The Department's case rests only on the ground that the Notification No. 182/94, as amended, has not been complied with. As already discussed, the Department could not produce any evidence to show that the goods involved, did not suffer Central Excise Duty. In these circumstances, we find that the Applicant is able to make out a prima facie case for total waiver of the pre-deposit. In these circumstances, the requirement of pre-deposit is waived and recovery thereof, stayed during pendency of the Appeal. Stay Petition is allowed.

Decision:-Stay granted.

Comment:- The crux of this case is that sinceno evidence was produced by department to show goods were recognizable as non-duty paid, or nil duty charged or cleared without payment of duty, deemed credit could not be denied prima facie.

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PJ/Case Laws/2012-13/1500

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