2004 (7) TMI 541 - AT - Central Excise

Summary

Issues:
Classification of medicaments for central excise duty under different sub-headings; Allegation of clearing products under nil rate of duty for export and availing Modvat credit against rules; Compliance with provisions of Rule 57CC regarding maintenance of separate accounts; Recovery of amounts due under Rule 57CC; Applicability of CENVAT Credit Rules 2002 for recovery; Interpretation of judicial pronouncements on recovery mechanisms.

Classification of Medicaments:
The appellants manufactured medicaments and declared them under sub-headings 3003.10 and 3003.20 for export and home consumption, respectively. The department contended that all medicaments should be classified under sub-heading 3003.20 attracting nil rate of duty. Show cause notice alleged clearance under 3003.20 for export, leading to a demand to reverse Modvat credit. The Deputy Commissioner dropped the proceedings, but the Commissioner (Appeals) required payment due to non-compliance with Rule 57CC.

Compliance and Recovery under Rule 57CC:
The Commissioner demanded payment at 8% of the value of exempted final products due to non-maintenance of separate accounts as required under Rule 57CC. The Tribunal referred to previous decisions and the absence of a specific recovery mechanism under the Act and Rules. The Revenue argued for recovery under CENVAT Credit Rules 2002, emphasizing Rule 6 and Rule 12 for recovering wrongly taken credit.

Interpretation and Applicability of Recovery Mechanisms:
The Tribunal observed that the CENVAT Credit Rules, 2002 provided a mechanism for recovering unpaid amounts under Rule 6. Section 11A of the Central Excise Act, 1944 was invoked in the show cause notice, satisfying the provisions of Rule 12 of the CENVAT Credit Rules, 2002. The Tribunal remanded the case to the original authority for appropriate action in accordance with the law, considering the applicability of CENVAT Rules retrospectively.

Conclusion:
The Tribunal allowed the appeal by remand, directing the original authority to take action under the CENVAT Credit Rules, 2002 for recovering the amounts due. The judgment highlighted the necessity of complying with Rule 57CC and the applicability of recovery mechanisms provided under the law, emphasizing the retrospective consideration of CENVAT Rules.