Refund under Rule 57CC must be netted against duty on captively consumed engines before any claim is allowed.

Where captively consumed diesel oil engines were treated as exempt under Notification No. 4/97, the 8% amount debited under Rule 57CC could not be refunded in isolation. The Tribunal held that the refund had to be examined after adjusting the duty attributable to the captively used engines, because the assessee had not paid duty on those engines while making the debit on the final product. Only any excess amount, if established, would be refundable. On that basis, the refund claim as made was not maintainable.

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Issues: Whether the amount debited at 8% under Rule 57CC was refundable without adjusting the duty liability on captively consumed diesel oil engines.

Analysis: The appellant manufactured diesel oil engines for captive use in the manufacture of centrifugal pump sets, and the Revenue's case was that the engines were exempted under Notification No. 4/97, attracting reversal of 8% under Rule 57CC. The Tribunal followed its earlier view that where the assessee had not paid duty on the captively consumed engines while debiting 8% on the final product, the refund claim could not be considered in isolation. The excess amount alone, if any, was refundable, and the amount had to be neutralized against the duty attributable to the diesel oil engines.

Conclusion: The refund claim was not maintainable as claimed and the appeal failed.

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