1999 (8) TMI 691 - Commissioner - Central Excise

Summary

Issues Involved:

1. Applicability of Rule 57CC of Central Excise Rules, 1944.
2. Interpretation of Rules 13, 191B, and 191BB of Central Excise Rules, 1944.
3. Eligibility for Modvat credit on inputs used in the manufacture of goods cleared under CT-2 certificates.
4. Whether the goods cleared under Chapter X procedure are exempt from duty or assessable to nil rate of duty.

Issue-wise Detailed Analysis:

1. Applicability of Rule 57CC of Central Excise Rules, 1944:
The primary issue was whether Rule 57CC applies when goods are cleared under CT-2 certificates for use in the manufacture of excisable goods meant for export under Rule 13. The Assistant Commissioner held that the appellants were required to debit an amount equal to 8% of the value of the goods cleared without payment of duty under Rule 57C read with Rule 57CC. However, it was found that the goods cleared under Chapter X procedure could neither be treated as exempted from payment of duty nor chargeable to nil rate of duty. Thus, Rule 57C and Rule 57CC were not applicable.

2. Interpretation of Rules 13, 191B, and 191BB of Central Excise Rules, 1944:
The appellants argued that Rule 13, Rule 191B, and Rule 191BB had been amalgamated, and their case fell under Rule 13(1)(b). The adjudicating authority's interpretation that the goods were exempted or assessable to nil rate of duty was incorrect. The clearance under CT-2 certificates was under Chapter X procedure, which involves remission of duty under specific conditions, not general exemption.

3. Eligibility for Modvat credit on inputs used in the manufacture of goods cleared under CT-2 certificates:
The appellants contended they were entitled to Modvat credit as their case was covered under Rule 13(4)(b), and the goods were neither wholly exempted nor assessable to nil rate of duty. The Tribunal's previous judgments supported this view, indicating that goods cleared under bond for export purposes do not fall under the purview of Rule 57C, thus allowing Modvat credit.

4. Whether the goods cleared under Chapter X procedure are exempt from duty or assessable to nil rate of duty:
The adjudicating authority's finding that goods cleared under Chapter X procedure are either wholly exempted or assessable to nil rate of duty was incorrect. The remission of duty under Chapter X is distinct from general exemption under Section 5A of the Central Excise Act, 1944. The Tribunal's rulings in similar cases, such as Orissa Synthetics Ltd. and Reliance Industries Ltd., established that goods cleared under bond for export are neither exempted from duty nor chargeable to nil rate of duty.

Conclusion:
The Tribunal concluded that the impugned order by the adjudicating authority was incorrect. The appellants' clearances under Chapter X procedure did not attract the provisions of Rule 57C or Rule 57CC. The appeal was allowed, and the order was set aside, affirming the appellants' eligibility for Modvat credit and the non-applicability of Rule 57CC to their case.