Rule 57CC recovery fails without machinery provision; demand and penalty based on 8% computation were set aside.

Recovery of the amount computed at 8% of the value of exempted clearances under Rule 57CC was held unenforceable because neither the Act nor the rules provided a machinery provision for such recovery. The Tribunal noted the assessee's offer to reverse the credit relatable to inputs used in exempted final products, but the confirmed demand and consequential penalty were based on Rule 57CC recovery and could not stand without statutory authority. The demand and penalty were therefore set aside, and relief was granted to the assessee.

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Issues: Whether the amount demanded at 8% under Rule 57CC could be recovered from the assessee, and whether penalty imposed on that basis was sustainable.

Analysis: The dispute turned on the absence of any machinery provision in the Act or the rules enabling recovery of the amount computed at 8% of the value of exempted clearances under Rule 57CC. The Tribunal followed the view that, where such recovery machinery is lacking, the amount cannot be enforced against the assessee. The assessee's offer to reverse the credit relatable to inputs used in exempted final products was noted, but the confirmed demand and consequential penalty were based on Rule 57CC recovery and could not stand.

Conclusion: The demand confirmed under Rule 57CC and the penalty were set aside, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: In the absence of a machinery provision authorising recovery of 8% of the value of exempted goods under Rule 57CC, such amount cannot be demanded from the assessee.

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