Rule 57CC inapplicable where the same excisable product is cleared both on duty payment and under exemption notification.

Rule 57CC of the Central Excise Rules, 1944 applies only where a manufacturer clears distinct final products, one duty-paid and another wholly exempt or nil-rated. A clearance of the same EOT crane under an exemption notification did not create a different final product from the crane cleared on payment of duty to other buyers. The record also showed that no input credit was retained for the exempt clearances and that any credit had been reversed, removing prejudice to the Revenue. On that basis, the 8% demand was unsustainable and the impugned demand was set aside.

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Issues: Whether Rule 57CC of the Central Excise Rules, 1944 applied to clearances of the same excisable product made without payment of duty under an exemption notification, so as to require payment of 8% of the sale price.

Analysis: Rule 57CC applies where a manufacturer produces both duty-paid final products and another final product that is wholly exempt or chargeable to nil duty. The product cleared to the specified buyer under Notification No. 10/97-C.E. dated 1-3-1997 remained the same EOT crane as that cleared on payment of duty to other buyers. A clearance under an exemption notification did not make it a different final product for the purpose of the rule. The record also showed that input credit was not availed for the exempt clearance and had been reversed, leaving no prejudice to the Revenue.

Conclusion: Rule 57CC did not apply, and the demand of 8% of the price was unsustainable. The issue was decided in favour of the assessee.

Final Conclusion: The impugned demand was set aside and the appeal succeeded.

Ratio Decidendi: A product cleared both on payment of duty and under an exemption notification does not become a different final product for the purpose of Rule 57CC of the Central Excise Rules, 1944; the rule applies only where there are distinct duty-paid and wholly exempt or nil-rated final products.

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