2014 (3) TMI 826 - AT - Central Excise

Recovery of 8% on sale price - Amendment in Rule 57AD - Held that - After this retrospective amendment to Rule 57AD, for clearance of exempted goods at the material time, the assessee is required to pay an amount equal to the CENVAT credit attributable to the inputs used in, or in relation to the manufacture of, exempted goods before or after the clearance of such goods along with interest from the date of clearance till the payment of the said amount - Matter remanded back - Decided in favour of Revenue.

Summary

Issues:
Recovery of 8% on sale price under Rule 57AD of Central Excise Rules.

Analysis:
The Appellate Tribunal heard the appeal of the Revenue against the setting aside of the demand for recovery of 8% on the sale price under Rule 57AD of the Central Excise Rules. The Commissioner (Appeals) had initially held that there could be no recovery based on the similarity of Rule 57AD with Rule 57CC and previous Tribunal decisions. However, it was noted that a retrospective amendment was made to Rule 57AD through the Finance Act, 2005, which inserted Explanation 2 in the Fourth Schedule. This amendment required recovery of the amount along with interest if the manufacturer failed to pay. Subsequent amendments in 2010 further clarified the procedure for adjustment of credit on inputs used in exempted final products. Therefore, the impugned order was found to be outdated in light of these retrospective amendments, necessitating a fresh decision based on the current legal position.

The retrospective amendment to Rule 57AD mandated that for the clearance of exempted goods during the relevant period, the assessee must pay an amount equivalent to the CENVAT credit attributable to the inputs used in manufacturing exempted goods, along with interest. The Tribunal concluded that the impugned order no longer reflected the correct legal position due to these amendments. Consequently, the case was remitted back to the adjudicating authority for a fresh decision in accordance with the law, ensuring a reasonable opportunity of hearing for the assessees. All issues were left open for reconsideration, and the appeal was allowed through remand, signifying the need for a new determination based on the updated legal framework.

In summary, the judgment highlighted the retrospective amendments to Rule 57AD of the Central Excise Rules, necessitating a fresh decision on the recovery of 8% on the sale price for exempted goods. The Tribunal emphasized the importance of aligning the decision with the amended legal provisions and provided directions for a new adjudication, ensuring a fair opportunity for the assessees to present their case.