2018 (7) TMI 238 - AT - Central Excise

Goods supplied to Ministry of Defence - N/N. 10/1997 dated 01.03.1997 - Department observed that appellant had not maintained separate accounts as per Rule 57CC(9) of the Central Excise Rules, 1944 - Held that - The authorities below had all along construed that the appellant had violated the provisions of Rule 57CCC. This issue has not been examined. Therefore, in the interest of justice, it is necessary to examine whether the appellant, in fact, has violated the provisions of Rule 57CCC - appeal allowed by way of remand.

Summary

Issues involved:
Adjournment request for the Appellant

Analysis:
The judgment involves a case where the appellant failed to appear for a hearing, citing liquidation of the company as the reason. The Ministry of Defence had exempted "Guidance Wire" from duty subject to certain conditions. The appellant was advised to maintain separate registers for the inputs used in manufacturing the exempted goods. The appellant informed the department about segregating the inputs and debiting the amount of MODVAT availed. However, the department found that separate accounts were not maintained as per Rule 57CC(9) of the Central Excise Rules. A penalty was imposed on the appellant for non-compliance. The Commissioner (A) upheld the demand but reduced the penalty. The appellant appealed against this decision.

The judgment highlights the introduction of a new rule, 57CCC (2), in the Central Excise Rules, 1944, which requires a person to pay the amount along with interest and provide documentary evidence for input credit attributable to exempted final products. The judgment also refers to the Fourth Schedule, specifically Sl.No.2, which outlines the reversal of actual credit in case of disputes related to adjustment of credit on inputs used in exempted final products. The authorities below concluded that the appellant violated Rule 57CCC, but this issue was not examined thoroughly. Therefore, the judgment remands the case to the Adjudicating Authority to consider the grounds of appeal and determine if the appellant indeed violated the provisions of Rule 57CCC. Ultimately, the appeal is allowed by way of remand, emphasizing the need for a detailed examination of the alleged violation.

In conclusion, the judgment addresses the non-appearance of the appellant, the exemption of "Guidance Wire" from duty, the requirement to maintain separate registers for inputs, the penalty imposed for non-compliance, the introduction of Rule 57CCC (2) and its implications, and the remand of the case to assess the alleged violation. The detailed analysis provides a comprehensive understanding of the legal issues and the decision-making process involved in the judgment.