2007 (8) TMI 519

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....ucts. The Adjudicating authority disallowed the Modvat credit taken by the assessee on the inputs which were used in the manufacture of exempted goods, also confirmed duty, as common inputs were utilized in exempted and dutiable final products and also imposed penalty.  The learned Commissioner (A) set aside the order in original on the following findings :- "I have carefully gone through the records of this appeal, the written as well as oral submissions of the Appellants made in their appeal memorandums and in course of personal hearing and I find that the issue is that the Appellant has opted for scheme under 57CC and pays 8% of the sale value of the exempted goods and avails Cenvat on all inputs. The revenue on an inquiry found ....

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.... demand of 8% of the value of exempted goods was already paid and is more than the credit availed by them. The Respondent was not aware of the provision of Rule 57CC of the Central Excise Rules, 1944, availed Cenvat credit on all inputs which were exclusively used for manufacture of exempted final products. The Revenue found that the assessee availed Cenvat credit on inputs, which were exclusively used for manufacture of exempted goods which is outside the purview of Rule 57CC.  The submission of the learned Consultant was that the provisions of Rule 57CC were confusing in as much that the credit taken on the inputs which are used in the manufacture of exempted products can be reversed subsequently is the correct proposition of law. ....