Per Shri T.P. Nambiar :

This appeal is directed against the orders passed by the Collector wherein under Rule 57I of the Central Excise Rules, 1944, he disallowed a credit of Rs. 20,77,178.74 by holding that the same is irregularly utilised by the appellants. In this particular case the appellants took credit on the scrap for the manufacture of the ingots. He took credit on the ingredients scrap. The duty on this scrap is Rs. 365/- per MT which is available as credit, whereas the duty on the ingots manufactured out of the scrap is Rs. 315/- per MT. The appellant also used scraps which are secondary and on which no duty was paid. The adjudicating authority, therefore, held that the excess credit could not have been used by the appellant in view of the fact that the imported scrap was not subjected to CVD. It is against this order the appellant has come up before the Tribunal.

2. The learned Advocate for the appellant contended before us that the issue is squarely covered by the decision of the Tribunal reported in 1989 (41) ELT 181 (Tri) in the case of M/s. Sawottam Ispat Private Ltd. Vs. CCE. He further pointed that the Board has also given a clarification in letter F.No. 261/72/16/87 dated 8.8.88. He pointed out that this circular issued by the Board is binding on the department and, therefore, the orders passed by the adjudicating authority may be set aside.

3. Heard the learned JDR. He pointed out that the appellant could have maintained two separate accounts with respect to indigenously procured scraps as well as the imported scraps. On a query from the Bench as to whether under what provision he is required to do the same, he could not point out any provision in this regard. On going through the circular of the Board, he stated the circular covers the issue in question and he has no specific plea in this regard.

4. We have considered the matter. No justification has been advanced in law in favour of the plea of the learned JDR in this regard. On the contrary, the position is covered by the above cited decision of the Tribunal reported in 1989 (41) ELT 181 (Tri) wherein at para 5 the Tribunal held as follows:

On a careful consideration of the submissions made by the learned Consultant and the learned SDR, we find that according to Rule 57-F (3) as amended, credit of specified duty allowed in respect of any inputs may be utilised towards payment of excise duty on any of the final products in or in relation to the manufacture of which such inputs are intended to be used in accordance with the declaration filed under Rule 57G. The appellants' case is that they have in fact, utilised the credit earned by them on the input scrap only on the single final product that they manufactured viz., steel ingots and that the provisions of Rule 57F (3) as above do not bar such utilisation when admittedly there is no one-to-one correlation between the input and output under the Modvat scheme. Examining this issue, it is observed that what Rule 52F (3) provides is that the credit of duty allowed in respect of any input can be utilised towards payment of duty on any of the final product in or in relation to the manufacture of which such inputs are used. A plain reading of the Rule, when considered in the background of the objective of the Modvat scheme viz., to provide instant credit for the manufacturers and to avoid cascading effect of taxation on input in relation to the final product, it will be clear that this Rule in terms will not be a bar for utilisation of amount of credit which may accumulate because of a situation where the duty on the final product is less than the duty on the inputs for payment of duty on the same final product. This conclusion is also supported by the admitted position that for the purpose of Modvat credit scheme, there is no one-to-one relationship of input and final product for the purpose of utilisation of credit. Therefore, in such a view of the matter, there is a lot of force in the submission of the appel