Rule 57CC reversal applies only to sale transactions, not stock transfers of exempted intermediate goods between units.

Rule 57CC of the Central Excise Rules, 1944 applied only where exempted goods were sold, because the provision required an amount equal to 8% of the price charged on clearance from the factory or similar sale channels. A transfer of exempted intermediate goods to another unit of the same manufacturer, without sale or consideration, did not satisfy that statutory condition. The definition of sale under the Central Excise Act supported this reading, and the fact that the goods remained available for use in manufacture of dutiable final products in the transferee unit meant there was no basis for further reversal of credit. Any independent computation on the buyer's sale price was therefore inapplicable.

---

---

Issues: Whether reversal of credit under Rule 57CC of the Central Excise Rules, 1944 was required where exempted intermediate goods were transferred to another unit of the same manufacturer without sale, and whether any further demand could survive after the assessee had already reversed credit on cost price.

Analysis: Rule 57CC(1) required payment of an amount equal to 8% of the price charged by the manufacturer for the sale of exempted final products at the time of clearance from the factory. The expression used in the rule, read with Rule 57CC(8), showed that the provision operated where there was a sale from the factory gate or from a depot, consignment agent's premises, or similar place. A transfer of pulp to another unit of the same manufacturer, without any sale or consideration, did not satisfy the statutory requirement of sale. The definition of sale under Section 2(h) of the Central Excise Act, 1944 also supported this conclusion. Since the intermediate product remained available for use in the manufacture of dutiable final products in the transferee unit, and the Modvat credit could be utilised against duty on those final products, there was no basis for demanding reversal under Rule 57CC. In that view, the question of adopting the independent buyer's sale price for computation did not arise.

Conclusion: Reversal under Rule 57CC was not applicable to the stock transfer, and the assessee was not liable to any further demand.

Final Conclusion: The appeal failed because the statutory mechanism for 8% reversal was confined to sale transactions and did not extend to intra-company transfers of exempted intermediate goods.

Ratio Decidendi: Rule 57CC of the Central Excise Rules, 1944 applies only where exempted goods are sold, and it does not require reversal of credit on stock transfer of such goods to another unit without sale or consideration.

---