2003 (7) TMI 143 - AT - Central Excise

Tribunal Partially Allows Appeal on Rule 57CC Interpretation

The Tribunal partially allowed the appeals in the case concerning the interpretation of Rule 57CC on Modvat credit for inputs used in manufacturing ... Cenvat/Modvat Issues:1. Interpretation of Rule 57CC regarding Modvat credit on inputs used in the manufacture of exempted products.2. Applicability of penalty on the manufacturer and employees for alleged non-compliance with Rule 57CC.3. Consideration of circulars and previous judgments in determining liability and penalties.Analysis:1. The case involved the interpretation of Rule 57CC concerning Modvat credit on inputs used in manufacturing exempted products. The appellant, a boiler manufacturer, took credit on inputs but later reversed it for exempted boilers. The department alleged non-compliance, demanding a significant duty amount and penalties on the manufacturer and specific employees.2. The appellant contended that no credit was actually taken, citing a Supreme Court judgment. The Commissioner, however, held that once credit was initially taken, Rule 57CC applied, requiring payment of 8% of the exempted product price. The Commissioner confirmed the demand and imposed penalties, leading to the appeals.3. The appellant accepted liability for certain amounts, including the 8% payment and some reversed credits. The counsel argued for reduced penalties based on a subsequent circular and relevant legal precedents. The department reiterated its position, emphasizing the reversal of credit only after departmental intervention.4. The Tribunal considered the circular's clarification on Rule 57CC, noting the appellant's actions aligned with the circular's requirements. It held that the appellant had already reversed credits as per the circular, limiting the liability to a specific amount. The Tribunal rejected the department's claim of credit reversal post-intervention.5. Ultimately, the Tribunal partially allowed the appeals, reducing the penalty and setting aside penalties on the employees. The judgment emphasized adherence to circulars, previous decisions, and the correct application of Rule 57CC in determining liability and penalties.