R. Jayaraman, Member (T)

1. This is an appeal directed against the order-in-appeal bearing No. V-2(Ch-72) 2019/88 (R-130/NG-18/89), dated 27-2-1989 passed by the Collector of Central Excise (Appeals), Bombay.

2. Brief facts necessary for the disposal of this appeal can be stated as below:

3. The appellants who are the manufacturers of Steel and Iron Casting filed a declaration for availment of MOD VAT in respect of various inputs. The declaration was filed on 15-3-1986. Subsequently in their letter dated 22-5-1986 they also intimated about the bringing in steel scrap purchased from the market on which they would be availing of deemed credit as per the Ministry's order, allowing deemed credit on market scrap. However, during the months of September and October, 1987, they received steel scrap directly from the manufacturers under gate passes evidencing payment of duty at Rs. 365/- per M.T. and on the strength of these gate passes MOD VAT credit was availed of in respect of actual duty paid on steel scrap. The Supdt. issued a notice disallowing the credit of duty involved on these four gate passes totalling Rs. 7,694.20 on the ground that their declaration dated 15-3-1986 did not contain specifically the name of the input, namely steel scrap, though other inputs have been mentioned. In the adjudication proceedings taken by the Assistant Collector, the aforesaid amount of MOD VAT credit was disallowed and demand confirmed. The appellants went in appeal before the Collector (Appeals), which was also rejected on the ground that the letter from the applicants dated 22-5-1986 pertain to only the deemed credit on steel scrap, whereas the appellants have taken credit in respect of actual duty paid on such scrap. The proforma for declaration does not contain the name of the input 'steel' waste and scraps. The appellants have come in appeal before this Tribunal against the order of the authorities below.

4. Shri H.S. Joshi, the learned advocate, appearing on behalf of the appellants, contended that they are not claiming MOD VAT credit in respect of steel scrap during the period from 15-3-1986 to 22-5-1986. Only after they had filed the letter dated 22-5-1986 mentioning clearly that they are bringing in steel scrap and would be availing of deemed credit, they have claimed MOD VAT credit in the months of September and October, 1987, when they came to receive such steel scrap directly from the manufacturers evidencing payment of duty. Hence on a rigid and narrow view taken by the authorities that letter dated 22-5-1986 is not a proper declaration for refusing credit is not justifiable. He also contended that the demand has been issued under Rule 571 by the Supdt., whereas it should have been issued by the Assistant Collector. He also contended that the demand is time barred, in respect of the credit taken during the month of September 1987, since the show cause notice was issued only on 31-3-1988. He, therefore, pleaded that the order of the authorities below is not at all justified, since they have clearly intimated the input, namely steel scrap, which was to be brought by them under the MOD VAT scheme.

5. Shri C.P. Arya, the learned SDR, contended that neither the proforma of declaration mentions the steel scrap as one of the inputs nor even the letter dated 22-5-1986 shows that steel scrap would be brought under gate passes. This letter is only to intimate that they will be bringing in market scrap and availing of deemed credit @ Rs. 220/- per M.T. Hence the availing of credit @ Rs. 365/- per M.T. on gate passes is not covered by any valid declaration. He, thus, justified the order. On the ground of time bar he had no submission to make.

6. After hearing both sides, we observe that the letter dated 22-5-1986 reads as below:

"In continuation to our letter dated 15-3-1986 we have to inform you that we shall be purchasing steel scrap from the open market as we have been doing earlier also. In absence of any duty paying documents we were not