The benefit of deemed credit under the MODVAT Scheme was available to the petitioners for the period March 1, 1986 to August 29, 1986, as the notification dated August 29, 1986, was not retrospective.

A. P. Chowdhri, J.

1. This judgment will dispose of 17 writ petitions Nos.6993, 6994, 6992 of 1986, 18, 130, 131, 132, 173, 174, 272, 404, 5252, 1041, 1042, 5977 and 5493 of 1987 and 2703 of 1988. While the main question of the impugned assessments stands settled, some ancillary matters regarding interpretation of certain orders remain to be dealt with. As the material facts in all these writ petitions are substantially identical, it will suffice to refer to the facts in CWP No.6599 of 1986 as being fairly representative of typical facts and circumstances leading to the filing of these petitions.

2. In order to appreciate the questions involved, it is necessary to state the background as under :3. The petitioners in all these writ petitions are manufacturers of steel ingots, steel billets, steel bars, rounds and rods and steel flats etc. The aforesaid products are manufactured by them by primarily using waste and scrap of steel commonly known as bazar Scrap. A scheme was introduced in the Finance Bill, 1986 called the MOD VAT Scheme. Under the scheme the manufacturers of excisable goods were allowed credit in the payment of excise duty etc. on the final products from out of the duty already paid on the inputs. In order to implement the scheme Rules 57a to 57j were inserted in the Central Excise Rules, 1944 . Under Rule 57a, the Central Government was empowered to notify inputs as well as final products under the Schedule to the Excise Tariff Act, 1985, which were to qualify for the said deemed credit. The credit was available subject to the conditions and restrictions specified in the notification.4. Under the above-mentioned Rule 57a, the Central Government issued Notification No.177/86-C. E. , dated 1-3-1986 Annexure P-2. The notification, inter alia specified Chapter 72 both in the list of inputs as well as that of the final products which qualified for MOD VAT Credit Scheme. Chapter 72 of the Central Excise Tariff Act, 1985 deals with iron and steel. Heading 73.02, in particular, deals with waste and scrap of iron and steel. Sub-heading 7203.10 deals with waste and scrap of iron and the duty leviable thereon at the material time was Rs.80/- per metric tonne. Sub-heading 7203.20 deals with waste and scrap of steel and it was liable to Central Excise duty at the rate of Rs.365/- per metric tonne. Sub-headings 72.06,72.07 and 72.09 deal with steel ingots, billets, bars and fiats. In other words, the waste and scrap of steel was covered in the list of inputs notified under the notification Annexure P-2 and the final products in the manufacture of which the petitioners are engaged was notified in the list of final products in the said notification.5. Rule 57g laid down the procedure to be observed by the manufacturer. It was provided that the manufacturer shall file a declaration with the Assistant Collector of Central Excise, obtain a dated acknowledgement and start availing of the deemed credit. The various accounts which the petitioners were required to maintain and the returns which they were required to file under Rule 57g and other relevant rules are as under: (i) Under Rule 57-G : RG-23-A Part I and Part II. Part I related to Stock Account of inputs for use in or in relation to manufacture of final products. Part II was an Entry Book containing credit of the duty; (ii) a declaration (iii) Gate pass (iv) AR-I (v) Bill of Entry (vi) Such other documents as may be prescribed by the Central Board evidencing payment of duty. (vii) Under Rule 173-G : Chapter VII-A a monthly return in RT-12. (viii) Form-IV Register in respect of raw material on daily basis. (ix) RG-I Register regarding production. Sub-rule (2) of Rule 57g contained a second proviso empowering the Central Government to direct that all stocks of inputs in the country except those lying in a factory or customs area or a warehouse as are clearly recognisable as being non-duty paid may be deemed to be duty paid and to allow credit of duty in respect of the s