Common input credit segregation under Rule 57CC triggered 8% payment on exempted final products cleared without separate accounts.

Where a manufacturer used common inputs for both dutiable and exempted goods and failed to maintain separate accounts, Rule 57CC required payment of a presumptive amount equal to 8% of the price of the exempted final products cleared from the factory. The Court accepted that the relevant exempted goods were the pumps themselves, not merely the captively consumed castings, and held that the absence of segregated inventory and input accounts attracted the rule. The Tribunal's contrary view was rejected for want of proper factual analysis, and the Revenue's appeal was allowed.

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Issues: Whether, under Rule 57CC of the Central Excise Rules, 1944, the assessee was liable to pay an amount equal to 8% of the price of the exempted final products cleared from the factory, when common inputs were used for both dutiable and exempted goods and separate accounts were not maintained.

Analysis: Rule 57CC(9) required a manufacturer using common inputs in dutiable and exempted goods to maintain separate inventory and accounts of receipt and use of inputs meant for exempted final products. In the absence of such segregation, the rule contemplated payment of a presumptive amount equal to 8% of the price of the exempted goods at the time of clearance. The finding that the relevant exempted final products were the pumps, and not merely the castings captively consumed in their manufacture, was accepted. The contrary view of the Tribunal was rejected as not supported by a proper factual analysis. The Court followed the principle that the 8% amount was payable on the exempted goods cleared from the factory where the assessee had not maintained the required separate accounts.

Conclusion: The assessee was liable to pay 8% on the price of the exempted final products cleared from the factory, and the Revenue's appeal was allowed.

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