2013 (3) TMI 186 - AT - Central Excise

Notification No. 67/95 benefit denied - assessee contested that he at the time of clearance of stators & rotors had reversed the credit equal to 8% of the price of stators & rotors cleared against the CT 2 certificate as per the provisions of Rule 57 AD of the Central Excise Rules - Held that - As per the provisions of Rule 57AD of the Rules, in case where the manufacturer is taking credit in respect of the common inputs used in or in relation to the manufacture of dutiable as well as exempted goods and not maintaining separate records, the manufacturer is required to pay 8% of the price of the exempted goods. As the appellants have reversed 8% of the price of the goods cleared at Nil rate of duty, therefore the appellants have fulfilled the conditions of Rule 57AD of the Rules. Thus the demand in respect of the intermediate product i.e. electrical lamination is not sustainable - in favour of assessee.

Summary

Issues:
- Appeal against order passed by the Commissioner of Central Excise (Appeals), Pune regarding denial of benefit of exemption Notification No. 67/95 for electrical laminations used in the manufacture of stators and rotors cleared at Nil rate of duty against CT 2 certificate.
- Contention regarding reversal of credit equal to 8% of the price of stators & rotors cleared against the CT 2 certificate as per Rule 57AD of the Central Excise Rules.
- Interpretation of Rule 57AD in the context of common inputs used in the manufacture of dutiable and exempted goods without maintaining separate records.

Analysis:

The appellants filed an appeal against the order passed by the Commissioner of Central Excise (Appeals), Pune, denying the benefit of exemption Notification No. 67/95 for electrical laminations used in the manufacture of stators and rotors cleared at Nil rate of duty against CT 2 certificate. The appellants argued that they reversed the credit equal to 8% of the price of stators & rotors cleared against the CT 2 certificate as required by Rule 57AD of the Central Excise Rules. They contended that this reversal of credit made the demand in respect of electrical laminations unsustainable.

The Revenue, on the other hand, supported the findings of the lower authority, stating that since the electrical laminations were captively consumed in the manufacture of final products cleared at Nil rate of duty, the benefit of Notification No. 67/95 was rightly denied. The Tribunal noted that the appellants had indeed reversed 8% of the price of the goods cleared at Nil rate of duty, in compliance with Rule 57AD. This rule mandates payment of a certain percentage when common inputs are used in the manufacture of dutiable and exempted goods without separate records.

Considering this, the Tribunal held that the demand in respect of the electrical laminations was not sustainable. The appellants had fulfilled the conditions of Rule 57AD by reversing the required credit, making them entitled to the benefit of the exemption Notification No. 67/95. Consequently, the appeal was allowed, and the appellants were granted consequential relief as applicable.

In conclusion, the Tribunal's decision was based on the interpretation and application of Rule 57AD in the context of the specific circumstances of the case, ultimately resulting in a favorable outcome for the appellants regarding the denial of exemption benefits for electrical laminations used in the manufacture of stators and rotors.