K. Sankararaman, Member (T)

1. M/s. Associated Pigments Limited have filed this Stay Petition seeking waiver of pre-deposit of the amount of duty due from them consequent to the Order-in-Appeal No. 175/Cal-IIA1 dated 12.9.1991 for the hearing of their appeal. By his said order the Collector (Appeals) confirmed the Order-in-Original dated 25.2.1991 passed by the Assistant Collector of Central Excise, Khardah Division, Calcutta-II Collectorate while rejecting their appeal to him. It was held in the impugned order that they were not eligible for the benefit of deemed Modvat Credit in terms of the deemed credit order dated 1.6.1989 as no credit was admissible under the said order if the inputs are clearly recognisable as being non-duty paid or wholly exempt from duty or charged to nil rate of duty.

2. S/Shri S.K. Bagaria and P. Banerjee, learned Advocates appeared for the Petitioners. Shri Bagaria arguing the case of the Petitioners referred to the following decisions on the scope of the expressions, "charged to nil rate of duty" and "clearly recognisable as non-duty paid":

(i) 1990 (49) ELT 2841 : 1990 (29) ECR 458 (Cegat WRB);

(ii) MANU/CE/0113/1990 1992 (38) ECR 98 (Cegat NRB);

(iii) MANU/CE/0387/1992.

As regards the scope of the expression, "wholly exempt from duty", Shri Bagaria contended that that would refer to goods wholly and unconditionally exempt from duty. The exemption Notification in question under which the lead ingots had been cleared by the manufacturers thereof, from whom the Petitioners had obtained the same, granted conditional exemption subject to the products being made from specified materials. Hence their inputs cannot be held to be excluded from the scope of the deemed credit order dated 1.6.1989 as they cannot be held to be clearly recognisable as being non-duty paid or wholly exempt from duty or charged to nil rate of duly. Shri Bagaria, then, referred to contention raised by them in their first appeal that if they had, instead of procuring lead ingots from a manufacturer thereof, obtained lead scrap and then sent it to job worker under Rule-57F for manufacture of the intermediate product, lead ingots, and receive the same for use in the manufacture of their final product, then they would be eligible for deemed credit on the quantity of scrap received by them. Only because, instead of following such a procedure, they purchased the lead ingots themselves from the manufacturer thereof, they cannot be deprived of the same benefit. That would be a harsh discrimination against them. The Collector (Appeals) had not decided the matter from this angle. He had refused to accept their plea based on the Tribunal decisions in Arun Springs and other cases on the ground that that decision has been challenged before the Supreme Court. Simply on that ground, it is not open to the Collector to refuse to follow the said decision. Thai will be a case of judicial impropriety not to follow a valid precedent. The decision of the Supreme Court in Kamalakshi Finance Corporation reported in 1991 (55) KLT433 : 1992 (38) ECR 486 (SC) would be relevant in this regard. Shri Bagaria conceded that there is a country decision of this Bench in Ma Tara Rope Works reported in MANU/CK/0013/1991 1991 (54) ELT 360 = 1992 (40) ECR 94 (Tribunal) on the scope of deemed credit order and of the expression, "clearly recognisable as non-duty paid or charged to nil rate of duty". He submitted, however, that the very fact that there are contrary decisions in the matter would justify the grant of stay. Moreover, in the present case, the Petitioners had deposited 50% of the amount in question as required by the Collector as a condition of the hearing of their first appeal. The deposit of the balance amount may be waived in view of the legal position pointed out by him and the appeal heard.

3. The arguments were opposed by Shri S. Dutt Majumder, learned Senior Departmental Representative. He referred to the decisions of this Bench in SAIL v. Collector of