2004 (3) TMI 241 - AT - Central Excise

Summary

Issues:
- Appeal against order passed by Commissioner (Appeals), Central Excise, Chandigarh regarding payment of 8% value of exempted goods under Rule 57AD of Central Excise Rules.
- Interpretation of Rule 57AD and its applicability to goods cleared without duty.
- Comparison with Rule 57CC and its relevance to the present case.
- Analysis of Tribunal's decision in Vam Organic Chemicals Ltd. v. CCE regarding credit of specified duty on inputs for exempted and dutiable goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT, NEW DELHI was filed by the Revenue against the order passed by the Commissioner (Appeals), Central Excise, Chandigarh. The case involved the manufacturing of excisable and exempted goods using common inputs, with the appellants availing credit for these inputs. The adjudicating authority held the appellants liable to pay 8% of the value of exempted goods under Rule 57AD of the Central Excise Rules. However, the Commissioner (Appeals) allowed the appeal based on a Board's Circular dated 16-10-2001.

The main contention of the appellant was that as per Section 57 AD, they were required to pay an amount equal to 8% of the value of goods cleared without duty. The respondents relied on a previous Tribunal decision in the case of Vam Organic Chemicals Ltd. v. CCE, Noida, where the Revenue demanded 8% of the value of goods cleared at NIL rate of duty under Rule 57CC. The Tribunal noted that Rule 57CC is relevant to the provisions of Rule 57AD. Referring to the decision of the Hon'ble Supreme Court in Chandrapur Magnet Wires Ltd. v. CCE, the Tribunal clarified that Rule 57CC applies when the credit of specified duty on any input is taken without maintaining separate entry and account of inputs for exempted and dutiable goods.

In the present case, the respondents were reversing the credit taken on inputs used in the manufacture of exempted goods at the time of clearance. Following the Tribunal's decision in Vam Organic Chemicals Ltd. v. CCE, the Tribunal found no issue with the impugned order and dismissed the appeal. The judgment highlights the importance of maintaining clear records of inputs for exempted and dutiable goods to avoid liability under Rule 57AD.