TMI Blog2009 (8) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... o be set aside. Thus, the appeal partly succeeds to the extent it relates to the penalty amount. - E/146/2005 - 734/2009-EX(PB), - Dated:- 27-8-2009 - Justice R.M.S. Khandeparkar, President and Shri M. Veeraiyan, Member (T) Shri S. Sunil, Advocate, for the Appellant. Shri P.K. Singh, SDR, for the Respondent. [Order per: Justice R.M.S. Khandeparkar, President (Oral)]. - Heard the learned Advocate for the appellants and the learned SDR for the respondent. 2. This appeal arises from the order dated 1-10-04 passed by the Commissioner (Appeals), Kanpur whereby the appeal filed by the appellants against the order of the Deputy Commissioner, Agra has been dismissed. The Deputy Commissioner, Agra vide his order dated 9-1-2002 had confirmed the demand of Rs.16,22,301/- against the appellants under Rule 57-I of the Central Excise Rules, 1944, hereinafter called as "the said Rules", for contravention of Rule 57CC of the said Rules while appropriating a sum of Rs.4,24,722/- being the amount of credit reversed and therefore, had demanded a sum of Rs.11,97,579/- from the appellants and had also confirmed duty of Rs.998/- in relation to the breakage of the product under Rule 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glassware, caps and leads, glass shells. These intermediate products were exempted from payment of duty under Notification No. 10/96 dated 23-7-96. He further submitted that taking into consideration the nature of the inputs which were utilised in the final product, it was practically impossible to maintain separate accounts in relation to the extent to which such inputs were to be utilised for the purpose of manufacture of final products which were totally exempt from the duty and those which were subject to payment of duty. Considering this practical difficulty faced by the appellants, according to the learned Advocate for the appellants though initially the credit was sought to be availed in respect of all these inputs including those which were utilised for manufacture of the final products which were wholly exempt from the duty, however, the same was reversed at the end of the month. Considering the same, according to the learned Advocate, the appellants were entitled to avail the benefit of exemption bearing in mind the Rule 57CC of the Central Excise Rules, 1944. The mere non-maintenance of separate accounts in the facts and circumstances of the case could not be a justific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-rule (9) of Rule 57CC provides that in respect of inputs other than the inputs used as fuel which are used in or in relation to the manufacture of any goods which are exempt from whole of the duty of excise leviable thereon or chargeable to nil rate of duty, the manufacturer shall maintain separate inventory and accounts of the receipt and use of the inputs for the manufacture of such products and shall not take credit of the specified duty paid on such inputs. In other words sub-rule clearly requires that specified duty paid on the inputs utilised in the manufacture of only exempted final products or those products which are subject to nil rate of duty, no credit should be taken in respect of such duty besides, that the separate account in respect of such inputs in relation to the receipt as well as used thereof in such final product should be maintained by the manufacturer. 9. The Rule clearly mandates the manufacturer to maintain separate accounts in relation to the inputs utilised in duty payable final products and those in nil-duty payable final products and those which are exempted from duty liability and refrain from availing credit in respect of the inputs utilised in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Tribunal had followed the ratio of the decision of the Supreme Court in the case of Chandrapur Magnet Wire (P) Ltd. 11. At the outset, it is to be noted that in the judgment of the Allahabad High Court the period for which exemption was claimed has not been specifically mentioned; however, on reading the judgment and particularly Paras 6 and 8 thereof, it appears that the same relates to the year 1995 or prior thereto. Undisputedly, the provisions of Rule 57CC came into force in 1996. Besides, the Allahabad High Court judgment does not disclose that the issue as to whether reversal of the credit even after the clearance of the final product could ennure to the benefit of the manufacturer or not was ever canvassed and/or subjected to judicial review and scrutiny, and whether it would apply even after enforcement of Rule 57CC. 12. It should not be forgotten that a ratio of a decision is to understood in the factual matrix involved therein and is to be culled out from the facts of the case, the point which arises in the matter and the decision based on the reasonings and the findings arrived at in that case. A decision in an authority for what it decides and not what can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts which are exempt from duty. In such a case, the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid. This can be done only if the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of the exempted final products. (Emphasis supplied)". 14. It was sought to be contended by the learned Advocate for the appellants that the observations by the Apex Court regarding reversal of the credit prior to the removal of final product was based on the Department circular. Indeed, the departmental circular was referred to by the Apex Court in the said judgment and it is apparent in Para 6. But the fact remains that the decision was delivered on 12th December, 1995 prior to enforcement of Rule 57CC. Thus, taking into consideration the departmental circular, the Apex Court had observed that the reversal of the credit has to be prior to clearance of the final product. The mandate of the Supreme Court judgment has been clearly incorporated in Rule 57CC itself. Rule 57CC(1) clearly requires the payment of the amount of 8% of the price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts which are exempt from the duty or which are chargeable to nil rate of duty and because he has reversed the credit at the end of the month and after the clearance of the final product that he would be entitled to avoid the obligation to pay the amount in terms of the provisions of the law comprised under Rule 57CC(1). Once the fact that reversal of the credit availed on such inputs is shown to have been after the clearance of the final product, the manufacturer cannot avoid the obligation to pay the amount in terms of the Rule 57CC(1). 17. That brings us to the next contention on behalf of the appellants which refers to Rule 57D(2) of the said Rules. The said rule provides that credit of specified duty shall also not be denied or varied in case any intermediate product have come into existence during the course of manufacture of the final product or the inputs are used in the manufacture of capital goods as defined in Rule 57Q and such intermediate product or the capital goods which are not chargeable to duty of excise. We wonder how the provisions of sub-rule are at all attracted in the case in hand. It is nobody's case that the credit has been denied to the appellant in r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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