By TIOL News Service

CHANDIGARH, JUNE 07, 2016: THE appellant was engaged in the manufacture of goods falling under Chapter 72 of the CETA, 1985 and had been availing the SSI notfn. No. 1/93-CE dated 28.2.1993. Further, the appellant had also been availing the benefit of deemed credit on re-rollable material of iron or steel as per Government of India order TS-36/94-TRUdated 1.3.1994. As per the said order, the facility of deemed credit @ Rs. 920/- per metric tonne without production of documents evidencing the payment of duty was allowed qua ingots and re-rollable materials of iron or steel purchased from outside and lying in stock on or after the 1st day of April, 1994 with the re-rollers, availing of exemption under notification 1/93-CE.

A SCN was issued for recovery of deemed credit of Rs.2.12 lakhs allegedly wrongly availed during the period from 1.12.1994 to 31.3.1995.

The adjudicating authority dropped the proceedings against the appellant on the basis of the decision of the Tribunal in Sri Venkateshwara Steel Industries where it is held that the benefit of deemed credit order No. TS36/94-TRU dated 1.3.94 continues to be admissible to SSI unit even after crossing exemption slab of Rs.75 lakhs and the Commissioner (A) too followed suit.

The department, therefore, went in appeal and the CESTAT held that the view taken in Sri Venkateshwara Steel Industries has been over-ruled by the Larger Bench in the case of Digamber Foundry 2002-TIOL-86-CESTAT-DEL-LB holding that the benefit of deemed credit in view of the Ministry's order dated 1.3.94 is not admissible to SSI unit after crossing the small scale exemption limit of clearances.

Accordingly, the Revenue appeal was allowed. We reported this order as 2004-TIOL-197-CESTAT-DEL.

Against this order, the assessee has filed an appeal before the High Court.

The following are the substantial questions of law:-

(i) Whether the benefit of deemed credit order no. TS-36/94-TRU dated 1.3.1994 continues to be admissible to SSI unit even after crossing the exemption limit slab of Rs.75lacs in terms of notification no. 1/93-CE dated 28.2.1993 as amended?

(ii) Whether notification No. 1/93-CE dated 28.2.1993 and deemed credit order dated 1.3.1994 have been correctly interpreted by the Tribunal?

The High Court inter alia observed -

++ The Himachal Pradesh High Court in Sood Steel Industrial (P) Ltd. v. Commissioner of Central Excise - 2009-TIOL-515-HC-HP-CX had held the judgment of the Larger Bench of the Tribunal in Digamber Foundry's case (supra) to be incorrect.

Noting that the Madras High Court in the case of Ganesh Steels - 2013-TIOL-1238-HC-MAD-CX and the Gujarat High Court in the case of Vinubhai Steel Co. Pvt. Ltd. - 2014-TIOL-2653-HC-AHM-CX had agreed with the view taken by the Himachal Pradesh High Court, the order of the Tribunal was set aside and appeal of the assessee was allowed.

(See 2016-TIOL-1071-HC-P&H-CX)