Rule 57CC(1) does not apply when the same excisable product is cleared partly on duty and partly under exemption.

Rule 57CC(1) of the Central Excise Rules, 1944 applies only where a manufacturer clears one dutiable final product and a separate final product that is exempted or chargeable at nil rate. Where the same excisable goods, here Caustic Soda Flakes and Trichloroethylene, were cleared mostly on payment of duty and only in a small quantity without duty under an exemption notification, the rule could not be invoked by treating different quantities of the same product as distinct final products. On those facts, the duty demand was unsustainable.

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Issues: Whether Rule 57CC(1) of the Central Excise Rules, 1944 was attracted where the same final products were cleared partly on payment of duty and partly without payment of duty under an exemption notification.

Analysis: The final products were Caustic Soda Flakes and Trichloroethylene. Both were excisable during the relevant period, and a major part of each product was cleared on payment of duty. Only a small quantity was cleared without duty under Notification No. 10/97-C.E. dated 01.03.1997. Rule 57CC(1) applies only where there is one dutiable final product and another distinct final product that is exempted or chargeable to nil rate of duty. The rule does not permit the Revenue to treat different quantities of the same final product as two separate final products merely because some clearances were exempt and others were dutiable.

Conclusion: Rule 57CC(1) was not applicable on these facts, and the demand was unsustainable.

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