Rule 57CC inapplicable to warehoused clearances under bond; proportionate credit reversal satisfied the compliance requirement.

Rule 57CC was treated as inapplicable to clearances made under bond through the warehousing procedure, because such goods were not cleared as exempted goods by the manufacturer and the duty liability arose on further clearance by the recipient. Proportionate reversal of credit on common inputs was accepted as sufficient compliance for the disputed clearances. The analysis also applied the settled principle that reversal of credit amounts to non-availment of credit, and the demand was held unsustainable on that basis.

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Issues: Whether Rule 57CC applied to clearances made under bond through the warehousing procedure, and whether reversal of proportionate credit on common inputs was sufficient compliance in relation to the disputed clearances.

Analysis: The goods were cleared by the manufacturer under bond following the warehousing procedure, so the recipient was required to discharge the duty liability on further clearance. Such clearances were not treated as clearances of exempted goods by the manufacturer. On that footing, Rule 57CC was held inapplicable to the manufacturer. Even otherwise, the record showed proportionate reversal of credit on inputs attributable to the relevant clearances. The decision also relied on the settled principle that reversal of credit amounts to non-availment of credit.

Conclusion: Rule 57CC was not attracted, and the proportionate reversal of credit was accepted as sufficient compliance. The demand was not sustainable.

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