S.K. Bhatnagar, Member (T)

1. These are departmental appeals filed against the orders of Collector of Central Excise, New Delhi.

2. As common issues are involved, all the five appeals were heard together for the sake of convenience.

3. The learned DR submitted that the basic legal issue involved in all these cases is whether in case of inputs which have been wholly exempted from duty albeit conditionally the benefit of modvat scheme was available to the respondents.

4. It was his submission that being wholly exempt from duty under various exemption notifications such as Notification Nos. 208/83, 152/86 and 178/84 they become clearly recognisable as being non duty paid, and in fact no duty is paid by the manufacturers on these goods at the time of their clearance from the factories. Hence the onus 1 gets shifted to the assessees, desirous of claiming modvat credit, to prove that excise duty had in fact been paid on these inputs.

5. As such, a proof of payment of duty was required to be adduced to avail the benefit of the provisions regarding deemed credit.

6. In all these cases duty paying documents were not produced, and in view of their exempted character the fact that they must have been cleared at nil rate of duty or without payment of duty was apparent. Hence the benefit of Government of India's Order D-22/5/26-TRU dated 7-4-1986 read with proviso to Section 57(G)(2) was not admissible, as per proviso II to Part 2 of the said order.

7. The learned Collector (Appeals) has therefore erred in allowing the benefit of deemed credit to the respondents.

8. The learned SDR also submitted that in this connection he would like to draw attention to an order of the South Regional Bench in the case of Rapsri Industries reported in MANU/CC/0039/1989 : 1989 (43) ELT 577. According to these orders in case the goods are conditionally exempted then non-duty paid character of such goods cannot be presumed but is required to be established before deemed credit is allowed.

9. It is, therefore, prayed that the orders of the learned Collector (Appeals) may be set aside.

10. The learned counsels led by senior Counsel Shri Kohli submitted that this point has already been considered by various Benches of the Tribunal in a series of orders of the Tribunal including those reported in MANU/CM/0023/1989 : 1990 (48) ELT 543 (Tri.).

11. In all these orders the Tribunal has held that since the goods were only conditionally exempted therefore, it cannot be presumed that they were not duty paid and the benefit of deemed credit was required to be extended if the items in question were covered by the deemed credit provisions.

12. They would in this connection like to draw attention in particular to the order of the WRB in the case of Anin Auto Spinning and Manufacturing Company in which it has been held that deemed credit is admissible even if the products are received under a gate pass showing nil rate of duty.

13. Furthermore, it is well established that the goods in the open market are deemed to be duty paid unless proved otherwise and the open market for this purpose even includes factories. In this respect, he would like to draw attention to the Supreme Court's judgment reported in MANU/SC/0342/1989 : 1989 (43) ELT 178.

14. He would also like to draw attention to the language of the notifications in question namely 208/83, 175/84, 186/84 and 178/84 which provide for conditional exemption.

15. He would also like to draw attention to proviso to 57G(2) which refers to the "all stocks of the inputs in the country except such stock lying in the factory/Customs area (as defined in the Customs Act, 1962).

16. Sub-para 52 of 62 clearly says that the warehouse are clearly recognisable as being non-duty paid, may be deemed to be duty paid and the credit of duty in respect of said inputs may be allowed.

17. These words themselves would go to show that the goods in the open market are deemed to be duty paid; and the onus of proving that the goods were not duty paid in a given c