2003 (12) TMI 240 - AT - Central Excise

Cenvat/Modvat - Demand of an amount equivalent to 8% of the price of Bio-compost Fertilizer under Rule 57-I - Penalty - HELD THAT - We have considered the rival submissions and find that the issue has been decided by two Commissioners (Appeals) and one of the Commissioners (Appeals) happens to be the present adjudicating Commissioner. The matter has been thoroughly discussed in both the orders in appeals passed by the ld. Commissioners (Appeals). We find both these orders passed by the Commissioners (Appeals) are correct orders as they have not used the chemicals for the manufacture of Bio-compost but the said chemicals were used in the manufacture of sugar and sugar being the final product and as the duty is paid on sugar and therefore noted that the inputs are not used in the non-duty paying product. This view is acceptable and therefore we hold that the provisions of Rule 57CC is not applicable in this case. In view of the above well-settled legal position we set aside the impugned order by allowing the appeal with consequential relief if any. Since a batch of appeals are to come up for hearing on 5th December 2003 Registry should issue this order immediately and to hand over the order by dasti to the counsel on record. Ordered accordingly.

Summary

Issues involved:
The issues involved in this case are the demand of an amount equivalent to 8% of the price of Bio-compost Fertilizer under Rule 57-I, imposition of penalty under Rule 57-I, and the demand of interest under Rule 57-I of the Central Excise Rules, 1944.

Judgment Details:

Issue 1 - Demand of Amount Equivalent to 8% of Bio-compost Fertilizer Price:
The appeal was filed against the Order-in-Original demanding an amount equivalent to 8% of the price of Bio-compost Fertilizer under Rule 57-I. The appellants argued that the chemicals used in their factory were for sugar manufacture, not Bio-compost Fertilizer. The Commissioner (Appeals) had previously held that Bio-earth was not manufactured using the same inputs as sugar, thus Rule 57CC was not applicable. The chemicals were used only for sugar production, not Bio-compost, making Rule 57AD and Rule 6(3)(b) inapplicable. The Tribunal found that the chemicals were used for sugar, not Bio-compost, and ruled in favor of the appellants.

Issue 2 - Imposition of Penalty and Interest:
The Commissioner imposed a penalty and demanded interest under Rule 57-I. The appellants argued that the chemicals were used solely for sugar production, not Bio-compost, citing previous orders and legal precedents. The Tribunal agreed that the chemicals were not used for Bio-compost, leading to the conclusion that Rule 57CC did not apply. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal upheld the legal position and directed the Registry to issue the order immediately.

This judgment clarifies the application of Rule 57CC in cases involving the manufacture of different final products and the use of common inputs. The Tribunal emphasized the importance of considering the actual use of inputs in determining the applicability of excise duty rules.