2007 (11) TMI 36 - AT - Central Excise

In terms of Rule 57E in case of variation in the duty paid on any inputs a certificate should be issued to enable the buyer of the inputs to avail the differential credit Held that even if duty was paid subsequent to adjudication order differential credit is admissible

Summary

Issues:
1. Dispute over duty on motor vehicle parts cleared with inadmissible SSI exemption.
2. Refusal to issue certificate under Rule 57E for credit of duty paid.
3. Interpretation of Rule 57E regarding clandestine clearances.
4. Buyer's right to avail credit of duty paid on goods received.
5. Application of case laws in support of appeal.
6. Procedural vs. substantive provisions under Rule 57A and 57E.

Analysis:
1. The dispute arose when an Assistant Commissioner demanded duty from a proprietor for motor vehicle parts cleared with inadmissible SSI exemption. The jurisdictional Assistant Commissioner refused to issue a certificate under Rule 57E for the duty paid, leading to an appeal by the proprietor.

2. The Revenue argued that Rule 57E did not allow issuing a certificate for duty paid on clandestine clearances. They claimed that subsequent amendments clarified this and were retrospective, thus justifying the refusal. However, the appellants contended that the buyer had a substantive right to credit of duty paid, citing relevant case laws.

3. The Tribunal analyzed previous cases to determine the applicability of Rule 57E. They found that the rule did not bar issuing a certificate where duty was not initially paid, as in the present case. The Revenue's argument about retrospective effect was dismissed, and the Tribunal upheld the buyer's right to credit.

4. Rule 57A allows manufacturers to avail credit of duty paid on inputs, ensuring no cascading effect. The Tribunal emphasized that this right cannot be denied due to procedural formalities. In this case, duty was paid on cleared goods post-adjudication, and the buyer was entitled to credit, as per Rule 57E.

5. The Tribunal referred to the Supreme Court's observations in a relevant case, highlighting the substantive nature of Rule 57A and the procedural aspect of Rule 57E. This distinction supported the Tribunal's decision to issue a certificate under Rule 57E to the appellants, affirming the impugned order and dismissing the appeal.

6. The judgment clarified the procedural and substantive aspects of Rule 57A and 57E, emphasizing the manufacturer's right to claim credit and the procedure for adjusting duty credit. By upholding the buyer's entitlement to credit for duty paid on inputs, the Tribunal ensured that substantive rights were not affected by procedural provisions.