9911796707
TMI Blog2003 (1) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal of the respondent/assessee. 2. Revenue has come in appeal on the grounds that the amount was collected as Central Excise duty as evidenced by the invoices raised by the assessees and not as towards the liability under Rule 57CC and therefore, provisions of Section 11D would squarely apply to the facts of the case. He submitted that reliance placed on the Circular bearing F.No. B-42/1/96-TRU, dt. 27-9-1996 issued by the CBEC and the provisions contained in Rule 57CC do not have any relevance to the facts involved in this case. 3. Ld. DR Shri C. Mani while reiterating the grounds of the appeal submitted that whatever has been collected as duty has to be paid to the department in terms of the provisions of Section 11D. He, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand have argued that the Ministry of Finance have clarified that the amount reversed under Rule 57CC is not by way of payment of duty and accordingly Modvat credit reversed cannot taken as reversal by the user of the goods and referred to Board's Circular dated 27th September, 1996 which has been reproduced as the Indore Trade Notice No. 66/96, dated 29th October, 1996. According to them, if the sum reversed under the Rules is not in the nature of duty, the department has no authority to collect the same under the Act. They have therefore prayed for setting aside the impugned order. 5. I find force in the appellants' arguments. Rule 57CC which deals with the adjustment of credit on inputs used in exempted final products or ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts contained in such final products at the time of their clearance from the factory. Sub-rule (9) says, in respect of inputs which are used in or in relation to the manufacture of any goods, which are exempt from the whole of the duty of excise leviable thereon, or chargeable to NIL rate of duty, a manufacturer shall maintain separate inventory and accounts of the receipt and use of inputs for the aforesaid purpose and shall not take credit of the specified duty paid on such inputs. 6. Thus, the net effect of the above rules is that where a manufacturer engages both in the production of fully exempt and dutiable final products, if he maintains separate accounts and does not take credit of the inputs which do not go into the stream of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by another manufacturer. The manufacturer of exempted goods indicates the amount of Modvat credit reversed on the invoices issued by him for such exempted goods. In this context, some doubts have been raised whether the amount of Modvat credit so reversed is available as Modvat credit to the user of such exempted goods when he uses them as inputs in his factory.'' 8. From the above it is clear that though the appellants have collected the amount debited under Rule 57CC, the Modvat chain is broken because the customer cannot use it as Modvat credit for the reason that what is reversed is not duty but only an amount. Thus, once the amount reversed under Rule 57CC is not considered as duty, the provisions of Section 11D are not attracted. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
