Jyoti Balasundaram, Member (J)

1. In these appeals the question that arises for consideration is the eligibility or otherwise of the goods manufactured by the appellants to MODVAT credit under Rule 57-I of the Central Excise Rules in respect of aluminium ingots (inputs in terms of Order No. 22/5/86-TRU dated 7-4-1986 issued by the Government of India under the second proviso to Rule 57G(2) and Government of India Order No. 332/30/87-TRU dated 2-11-1987.

Appeal No. 58/89-NRB - Details

2. The appellants manufacture aluminium pistons, pins and rings falling under Heading 8409 and 8714 which are chargeable to duty on an ad valorem basis. The products are manufactured out of aluminium alloy ingots falling under Heading 76.01. The aluminium pistons and aluminium ingots are specified final products and inputs as per Notification No. 177/86-C.E. and accordingly the appellants were availing credit of duty on inputs received in his factory and utilised in the manufacture of final product after filing requisite declaration. As per Rule 57G of the Central Excise Rules a manufacturer of final products may take credit of duty paid on the inputs received by him provided they are accompanied by gate pass or other specified documents evidencing duty payment. The Rule also provides further that the Central Government, having regard to the period that has elapsed since excise duty was imposed on any inputs, direct that with effect from a specified date stocks of the said inputs in India excepting such stocks lying in a factory customs area or a warehouse as are clearly recognised as non-duty paid may be deemed to be duty paid and credit of duty on the said inputs may be allowed without producing documents evidencing payment of duty. The Central Government issued order F. No. B-22/5/86-TRU dated 7-4-1986 (under Rule 57G) under which deemed credit of Rs. 2300/- per tonne was allowed on aluminium alloy ingots subject to certain conditions being fulfilled; the order stipulated that no credit shall be allowed :

(i) if . . .

(ii) if such inputs are clearly recognisable as being non-duty paid or charged to nil rate of duty or

(iii) if . . .

[(i) and (iii) are not relevant]

By order F. No. 332/30/87/TRU dated 2-11-1987 issued under Rule 57G(2) the facility of deemed MODVAT on unwrought aluminium in any form was continued but the condition in the earlier order of April 1986 was modified and changed as hereunder; no such credit shall, however, be allowed,

(i) if . . .

(ii) if such inputs are clearly recognisable as non-duty paid.

3. The charge against the appellants is that the inputs received by them and used in the manufacture of final products were exempted from payment of duty and as such were clearly recognisable as non-duty paid or charged to nil rate of duty and, therefore, deemed credit was not available in terms of the Government orders (supra).

4. We have heard Smt. Archana Vadhwa, Learned Counsel and Shri S.K. Sharma, learned DR.

5. The first contention of the learned Counsel is that the demand for Rs. 4,73,782.50 (covered by show cause notice of 17-12-1987 and subject matter of appeal No. E/59/89-NRB is barred by limitation as it has been raised after a period of six months from the relevant date. The appellants were availing MODVAT credit of duty under the deeming provision after filing necessary declaration under Rule 57G and were filing copies of the prescribed statutory records for availing MODVAT credit to the Jurisdictional Range Superintendent along with monthly RT 12 returns and copies of sale invoice of the person from whom the inputs were cleared. The RT 12 returns were duly assessed after allowing the deemed credit taken by the appellants without raising any objection. We see great force in the contention of the appellants that the fact of non-declaration by the appellants as to whether they have received the inputs from the manufacturing units after being cleared at Nil rate of duty will not amount to suppression. The Collector (Appeals