2011 (3) TMI 667 - AT - Central Excise

Classification - MODVAT/CENVAT credit - Rule 57A/57AB of the erstwhile Central Excise Rules, 1944 - Held that the issue involved in this case is whether respondent has correctly paid amount equivalent to 8% the value of rectified spirit captively consumed by them in the manufacture of country liquor on the basis of sale price of same class of goods i.e. ethyl alcohol to independent buyers at factory gate - since the respondent has not sold the final product i.e. rectified spirit to any one and its selling price was not available at that time of clearance of the factory - the contention that the sale price of exempted category of ethyl alcohol which was used captively by the respondent for manufacture of country liquor is not available cannot be accepted in the revenue s appeal - Decided in favour of the assessee

Summary

Issues:
1. Correct payment of 8% value of rectified spirit captively consumed in the manufacture of country liquor.
2. Applicability of Rule 57CC and Rule 57AD(2) in the case.
3. Interpretation of the term "such goods" in the context of Rule 57AD(2B).
4. Whether the sale price of the exempted category of ethyl alcohol used captively for the manufacture of country liquor is required for applying Rule 57AD(2B).

Analysis:
1. The case involved a dispute regarding the correct payment of an amount equal to 8% of the value of rectified spirit captively consumed by the respondents in the manufacture of country liquor. The issue was whether the respondents had correctly paid this amount based on the sale price of similar goods to independent buyers at the factory gate.

2. The Revenue contended that Rule 57CC was not applicable as the rectified spirit was not cleared in the market, and the provisions of valuation were not applicable since no sale was involved. The Commissioner (Appeals) upheld the adjudication order, leading the Revenue to appeal, arguing that the 8% duty should be reversed on the value of country liquor, not rectified spirit.

3. The lower appellate authority analyzed the case in detail, emphasizing that Rule 57AD(2) would apply only if the price charged for the exempted goods at the time of clearance was known. The Tribunal held that the term "such goods" in Rule 57AD(2B) referred to goods of the same class or group, not necessarily identical goods. As the ethyl alcohol used for country liquor was of the same class, the argument that the sale price was unavailable was deemed untenable.

4. The Tribunal agreed with the lower appellate authority, stating that the impugned order was upheld as there was no infirmity in it. The Revenue's appeal was rejected, emphasizing that the sale price of the ethyl alcohol used for country liquor did not need to be available for the application of Rule 57AD(2B).