TMI Blog1999 (12) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The appellants manufacture tractors of two types viz. Tractors having engine capacity of more than 1800cc and less than 1800cc. The tractors having engine capacity more than 1800cc are chargeable to Central Excise duty while those having engine capacity less than 1800cc are exempted under the provisions of Notification No. 164/86, dated 23-2-1986 as amended. The appellants are using three types of inputs for manufacture of tractors. The first type of inputs are those which are used exclusively in the manufacture of dutiable tractors. The second type of inputs are those which are common for dutiable as well as exempted tractors. The third type of inputs are meant exclusively for exempted tractors. The appellants availed Modvat Credit of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (2) of Rule 57CC and maintained separate accounts etc. and not taken credit of the specified duty on the subject inputs. As they have failed to follow the procedure contained in Rule 57CC(2) and as the procedure contained in Rule 57CC(1) was not rightly applicable to them, the provisions of Rule 57C(1) could not be deemed to be satisfied and the duty demand of Rs. 18,37,104/- has been rightly confirmed by the adjudicating authority. However, I observe that provisions of Section 11AC are not applicable in this case as none of the grounds for imposing penalty under this section are satisfied. The appellants had followed this erroneous procedure for a total of 20 days immediately on introduction of Rule 57CC and had also informed the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the contention of the appellants that the above expression covers exclusive inputs as well as common inputs, is not tenable, having regard to the language of sub-rule (2) which refers to manufacture of both types of final products. The further contention of the appellants is that sub-rule (2) of Rule 57C grants manufacturers availing of Modvat Credit on inputs, the option of following either the procedure laid down under Rule 57-CC(1) or (2), and that once the manufacturer follows anyone of the two against taking procedures, the bar against taking Modvat Credit contained in Rule 57C(1) would not apply. We do not see force in this submission. Rule 57CC(1) states that where a manufacturer is engaged in the manufacture of any final prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts. To illustrate our point, let us give an example. Rule 57CC would apply to nuts and bolts which the appellants state are capable of use in tractors having engine capacity below 1800cc and exceeding 1800cc. For nuts and bolts, the appellants have the option either to pay 8% of the price of the tractors with engine capacity exceeding 1800cc (which are chargeable to duty at the rate of 10% during the relevant period) at the time of clearance of both varieties of tractors, dutiable as well as exempted; if the appellants do not wish to opt for payment of 8% of the price of exempted tractors at the time of clearance of dutiable and exempted tractors, they can maintain inventory and accounts for receipt and use of inputs going into the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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