2007 (8) TMI 519 - AT - Central Excise

Summary

Issues involved:
Whether Cenvat Credit can be availed on inputs exclusively used in the manufacture of excisable products; Misconstrual of Rules 57C and 57CC; Time bar for issuing Show Cause Notice.

Analysis:
1. The appeal challenged an order setting aside the disallowance of Modvat credit on inputs used in manufacturing exempted goods. The Commissioner (A) noted the appellant's utilization of Cenvat on inputs exclusively used for exempted goods, which contravened Rule 57CC. However, considering the totality of revenue involvement, excess payments offset the demand under Rule 57C. The Tribunal's similar precedent supported this view.

2. The Respondent contended that they were unaware of Rule 57CC and believed the credit availed exceeded the 8% duty paid on exempted goods. The Revenue found the appellant availed credit on inputs exclusively for exempted goods, beyond Rule 57CC's purview. The Consultant argued for subsequent reversal of such credits, citing confusion over Rule 57CC's provisions.

3. The Tribunal clarified that Rule 57CC applies to common inputs for both exempted and dutiable products. The Revenue's stance, disallowing credit on inputs solely for exempted products under Rule 57C, aligned with Rule 57CC's scope. Availing credit on inputs solely for exempted products violated Rule 57C from the outset, rendering such credit void.

4. The appellant's argument of paying more than the duty credit by 8% of exempted goods' value did not absolve the violation, as Rules 57C and 57CC address distinct scenarios. The Show Cause Notice's timeliness was questioned, citing a Supreme Court decision, but the lack of a specific finding on this issue in the Commissioner (A)'s order rendered it non-speaking.

5. The Tribunal concluded that the Commissioner (A) should have individually considered Rules 57C and 57CC. The absence of findings on the timeliness issue rendered the order non-speaking. Consequently, the appeal was allowed for remand to the Commissioner (Appeals) for detailed findings on the time bar and the application of Rule 57C to the case.