2004 (3) TMI 243 - AT - Central Excise

Summary

Issues:
Calculation of duty under Rule 57CC of the Central Excise Rules for final products; Reversal of Modvat credit on inputs for exempted goods; Applicability of Board Circular No. 591/28/2001-CX; Interpretation of Rule 57CC based on judicial precedents.

Analysis:
The appellants contested the Order-in-Appeal directing them to calculate duty at 8% of the value of final products cleared during a specific period under Rule 57CC. They argued that there was no mechanism for duty recovery under Rule 57CC during that time. The appellants reversed the Modvat credit on inputs used for both dutiable and exempted goods by debiting entries in RG-23A Part-II. They maintained that debiting the Modvat credit account for inputs in the manufacture of exempted goods did not amount to claiming duty credit. They cited the Chandrapur Magnet Wires case to support their position.

The appellant's counsel referenced Board Circular No. 591/28/2001-CX and the Madras Bench case of CCE v. Dharani Sugars & Chemicals, which held that Rule 57CC did not apply in similar situations. Additionally, the judgment in Licon Eskey Enterprises (I) Pvt. Ltd. v. CCE highlighted that reversing credit on inputs for exempted final products under Rule 57C would negate the demand for duty and penalty. The judgment in Murugappan Morgan Thermal Ceramics Ltd v. CCE, Chennai was also cited for support.

Upon reviewing the submissions, judgments, and Circular, the Tribunal acknowledged the appellant's compliance in reversing duty credit for exempted goods. Given the absence of a duty recovery provision under Rule 57CC during the relevant period, the demands raised were deemed unjustified. Citing the precedents, the Tribunal concluded that the impugned order was set aside, and the appeal was allowed, favoring the appellants.