2006 (12) TMI 157 - HC - Central Excise

Summary

Issues:
1. Admissibility of credit under Rule 57C and 57CC for both dutiable and exempted goods without separate account maintenance.
2. Allowance of specific duty credit on inputs for exempted final products.
3. Liability to pay 8% duty when credit is allowed without separate accounts.

Analysis:
1. The revenue filed a petition under Section 35H of the Central Excise Act, seeking a direction for the Tribunal to refer questions of law from their order. The questions pertained to the admissibility of credit under Rule 57C and 57CC for both dutiable and exempted goods without separate account maintenance. The case involved an assessee engaged in manufacturing steel forgings and forged articles availing Modvat credit under Central Excise Rules. It was found that the assessee used modvatable inputs for dutiable goods and job work without paying duty or reversing Modvat credit, failing to maintain separate accounts as required. The duty of 8% of the price was deemed payable in such cases.

2. The second question raised was regarding the allowance of specific duty credit on inputs used for manufacturing final products exempted from duty or charged at a 'nil' rate. The case highlighted that the assessee was utilizing modvatable inputs for both dutiable goods and job work without maintaining separate accounts, leading to the duty liability issue.

3. The final issue addressed whether the party is liable to pay 8% duty even when credit of duty is allowed but separate accounts for inputs used in dutiable and duty-free goods are not maintained. Despite the respondent's absence, the Court directed the Tribunal to send the statement of the case for determination of the liability to pay duty at the rate of 8% in case of failure to maintain separate accounts. The judgment concluded by disposing of the petition, emphasizing the importance of complying with the rules and maintaining accurate records to avoid duty liabilities.