2007 (8) TMI 578 - AT - Central Excise

Summary

Issues involved: Department's appeal against the order of the Commissioner regarding the demand under Rule 57CC for the amount payable on exempted silica oxides.

Summary:
The case involved the Department's appeal against the Commissioner's order regarding the demand under Rule 57CC for the amount payable on exempted silica oxides. The respondents were engaged in manufacturing dutiable products like glass and glass mirrors, along with exempted products such as silica oxides. The issue arose as the chemicals used in manufacturing silica oxides were also used in making other dutiable products, and no separate accounts were maintained for inputs used in exempted silica oxides. The Department issued a show cause notice demanding an amount under Rule 57CC, which the Commissioner dropped partially after the respondents voluntarily reversed a portion of the credit taken on chemicals used in silica oxides. The Department contended that the Commissioner's decision was contrary to Rule 57CC, which mandates reversing 8% of the value of clearances of exempted final goods if separate accounts are not maintained.

The Department argued that the recovery at 8% of the value of exempted goods under Rule 57CC is permissible, citing precedents. On the other hand, the respondent relied on a Circular of the Board and a Tribunal decision, asserting that recovery of incorrectly taken credit is covered by Rule 12. The Tribunal noted that common inputs were used for dutiable and non-dutiable products without separate accounts, leading to a payment by the respondents during investigation. The Tribunal emphasized that the Cenvat credit scheme allows credit only if duty is paid on the final product, and recovery is applicable if no duty is paid on the final product. The Tribunal upheld the Commissioner's order, stating that the Department could recover input duty credit if the provisions of Rule 57CC(1) were not fulfilled by the assessee. As the respondents did not opt for Rule 57CC(1), the Commissioner's decision to drop the proceedings based on proportionate credit was deemed legal and proper.

In conclusion, the Tribunal dismissed the Department's appeal, affirming the Commissioner's order as legally sound and finding no valid grounds to interfere with the decision.

*(Pronounced in Court on 29-8-2007)*