2004 (3) TMI 219 - AT - Central Excise

Summary

Issues: Contesting demand under Rule 57H of Central Excise Rules, 1944 read with Section 11A of the Central Excise Act 1944. Interpretation of exemption provisions and applicability of Rule 57CC.

In this judgment by the Appellate Tribunal CESTAT, MUMBAI, the appellants contested a demand of Rs. 1,73,504.80/- confirmed against them under Rule 57H of Central Excise Rules, 1944, read with Section 11A of the Central Excise Act 1944. The amount in question related to 8% of the value of fully exempt final goods. The appellants challenged the demand on the grounds that the recovery sought was not Central Excise duty but an amount equivalent to 8% of the price of the finished exempt goods. They relied on a previous Tribunal judgment in their own case, which held that the amount payable under Rule 57CC is neither duty nor credit, thus notice cannot be issued under Section 11A.

The revenue, on the other hand, relied on a Cegat judgment in the case of Dujodwala Resins Terpenes Ltd. v. Collector of Central Excise, Chandigarh, where it was held that goods cleared under Chapter X being exempt, Rule 57CC can be invoked to demand the amount. The appellants, in response, cited another Cegat judgment in the case of Commissioner of Central Excise & Customs, Ahmedabad-I v. Omkar Textile Mills Limited, which distinguished the applicability of Rule 57CC in cases of goods cleared under bond for export without payment of duty. The appellants' case involved removal without duty payment under exemption Notification No. 5/99-C.E., dated 28-2-1999 against a CT 2 certificate.

The Tribunal, considering the movement against CT 2 certificate, found that even if the removal amounted to clearance of fully exempt goods, the orders of the lower authorities confirming the demand could not be sustained. The Tribunal referred to the judgment of the Madras High Court in Eternit Everest Ltd v. U.O.I., which was also applied in the appellants' own case in a previous final order. Based on this, the Tribunal concluded that there was no ground to uphold the demand against the appellants, and consequently, the appeal succeeded with the orders of the lower authorities being set aside.