2011 (5) TMI 39 - AT - Central Excise

Demand of duty - Input used in the manufacture of dutiable as also exempted final product - The duty stand confirmed against the appellant in terms of provisions of erstwhile Rule 57CC of Central Excise Rules 1944 - Find that the Commissioner has held that in terms of Section 68(3) of Finance Act 2010 an amount determined as the proportionate amount of CENVAT Credit to be recoverable from the appellant in respect of demand made under the provisions of Rule 57CC. The Tribunal in the case of M/s Global Pharmatech Pvt. Ltd. has held that where such credit stand reversed by the assessee along with interest in terms of Commissioners order passed in terms of provisions of Section 73(1) of the Finance Act 2010 the order demanding duty on the final exempted product in terms of provisions of Rule 57CC is liable to be set aside.

Summary

Issues:
Confirmation of duty under Rule 57CC of Central Excise Rules, 1944 without separate records/accounts for input, Reversal of MODVAT Credit under Finance Act, 2010, Proportionate CENVAT Credit recoverable from the appellant, Interest calculation @ 24% per annum, Setting aside duty confirmation under Rule 57CC.

Confirmation of duty under Rule 57CC:
The Tribunal confirmed duty against the appellant under Rule 57CC of Central Excise Rules, 1944 due to the absence of separate records/accounts for inputs used in the manufacture of dutiable and exempted final products. The appellant's advocate argued that they approached the Commissioner for reversal of MODVAT Credit of duty paid on inputs used in manufacturing exempted goods, citing a Tribunal decision in a similar case. The Commissioner determined a proportionate amount of CENVAT Credit to be recoverable from the appellant and calculated interest at 24% per annum, which the appellant had already paid. The Tribunal referred to a previous case where duty confirmation was set aside when the credit was reversed along with interest as per the Commissioner's order under the Finance Act, 2010.

Reversal of MODVAT Credit under Finance Act, 2010:
The appellant sought the reversal of MODVAT Credit under the Finance Act, 2010, by approaching the Commissioner. The Commissioner accepted the reversal of credit attributable to exempted goods, as requested by the appellant. This reversal was crucial in the Tribunal's decision to set aside the duty confirmation under Rule 57CC.

Proportionate CENVAT Credit recoverable and Interest calculation:
The Commissioner determined a specific amount of CENVAT Credit to be recoverable from the appellant in relation to the demand made under Rule 57CC. Additionally, interest was calculated at 24% per annum, which the appellant had already paid. The Tribunal considered these calculations and the reversal of credit while deciding to set aside the duty confirmation.

Setting aside duty confirmation under Rule 57CC:
In light of the appellant's successful reversal of MODVAT Credit, the Tribunal set aside the impugned order confirming duty under Rule 57CC. The appeal was allowed with consequential relief granted to the appellant, emphasizing the importance of complying with the provisions of the Finance Act, 2010 in such cases.