2007 (2) TMI 472 - AT - Central Excise

Summary

Issues:
1. Dispute over payment of duty under Rule 57CC for submersible pumps manufactured from rough castings.
2. Whether 8% of the price of pumps or rough castings should be paid as duty.
3. Applicability of Modvat credit and time-bar provisions of Section 11B.

Analysis:
1. The case involved a dispute between the assessee and the Revenue regarding the payment of duty under Rule 57CC for submersible pumps manufactured from rough castings. The assessee was engaged in manufacturing pumps exempt from duty under a specific notification. The issue was whether 8% of the price of the pumps cleared without payment of duty or 8% of the price of rough castings captively consumed in manufacturing the pumps should be paid as duty.

2. The appellate tribunal referred to a previous decision by the Larger Bench, which held that the rough castings, not the pumps, were to be treated as the final product for the purpose of Rule 57CC. The tribunal upheld the decision of the lower appellate authority, ruling in favor of the assessee. Consequently, the Revenue's appeal was dismissed based on the Larger Bench's interpretation.

3. Regarding the Modvat credit issue, the assessee had initially paid a higher amount towards duty under Rule 57CC but later realized the correct amount. The difference in the amounts resulted in a Modvat credit taken by the assessee. The Commissioner (Appeals) had made observations regarding the time-bar provisions of Section 11B concerning the Modvat credit. However, the tribunal found that there was no proposal in the show-cause notice to recover duty equivalent to the Modvat credit. Therefore, the tribunal allowed the assessee's appeal, directing the deletion of certain observations made by the Commissioner (Appeals) regarding the Modvat credit and time-bar provisions.

In conclusion, the tribunal resolved the issues by interpreting the relevant rules and previous decisions, ultimately ruling in favor of the assessee on both the duty payment and Modvat credit matters.