2004 (2) TMI 574 - AT - Central Excise

Summary

Issues:
Recovery under Rule 57AH(1) of Central Excise Rules, 1944 and Rule 12 of CCR, 2001 read with Sections 11AA and 11AB; Penalty under Rule 173Q(1) (Rule 25 of 2001) read with Rule CCR, 2001; Inclusion of transportation charges in the price for debiting CENVAT credit.

Analysis:
The Commissioner ordered recovery of Rs. 64,72,952 under Rule 57AH(1) of Central Excise Rules, 1944 and Rule 12 of CCR, 2001 read with Sections 11AA and 11AB, along with a penalty of Rs. 2 lakhs under Rule 173Q(1) read with Rule CCR, 2001. The dispute arose when the appellants, manufacturing Cement & Cement Clinker, debited CENVAT credit at 8% of the goods' price while clearing them to Earthquake-affected areas of Gujarat. The department contended that transportation charges should be included in the price, leading to a demand for differential duty and penalties.

The appellant argued that the issue was settled in the Tribunal's decision in Pushpaman Forgings v. CCE, where it was held that debiting 8% of the exempted final product's price on clearance is not recoverable if not debited correctly, due to the absence of recovery provisions in the Act or Rules. The Tribunal's decision was upheld by the Supreme Court. In the present case, although the appellants debited 8% of the price, the calculation was incorrect, resulting in the alleged short levy. Notably, neither the appellant nor the adjudicating authority referenced the Tribunal's decision during the proceedings before the Commissioner.

The Tribunal, noting that the issue was covered by its previous decision, set aside the Commissioner's order based on the legal position established in the earlier case. Consequently, the appeal was allowed, overturning the recovery and penalty imposed by the Commissioner.