TMI Blog2013 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... case of RICO AUTO INDUSTRIES LTD. (2006 (12) TMI 326 - CESTAT, NEW DELHI) that the rule contemplated removal of inputs in respect of which a credit of duty had been allowed where they are not used in relation to manufacture of final products with a condition that on their removal, the excise duty shall be paid to the tune of the credit availed under Rule 57A for such inputs. Even if were to be held that no process was undertaken on these goods, then obviously there was no liability to petitioner pay excise duty on the footing that these goods were manufactured by the appellant, because if they were already brought as inputs from other manufacturer and no further process was undertaken, they would obviously be not liable for payment of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n should not be reversed and penalty should not be imposed. Respondent opposed such proceedings contending that the credit was taken as per the rules. It contended that respondent had carried out manufacturing activity on the pump sets purchased by it and on the value addition had also paid excise duty. Case of the respondent also was that if as contended by the Revenue there was no manufacturing activity, question of payment of excise duty itself would not arise. 2.3 The Adjudicating Authority however, was not convinced by such arguments. Assistant Commissioner therefore, passed two separate orders dated 10.4.1997 and 31.9.1998, confirming duty demand of Rs.3,36,667/- and Rs.33,750/- respectively. He also imposed penalty of Rs. 1 lakh on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Ti is admitted fact that the appellants paid duty when they cleared the final output. This duty happened to be more than the credit taken. 3. Revenue has filed the present appeal challenging the orders passed in both the proceedings by the Tribunal contending that since no manufacturing activity was carried out by the respondent on the PD pumps purchased from its sister concern, was not entitled to avail modvat credit thereon. 4. We have heard learned counsel for the parties and perused the relevant rules. 5. Rule 57A of the Rules was part of Chapter VAA to the Rules pertaining to credit of duty paid on excisable goods used as inputs. Sub-rule(1) of Rule 57A provided that the provisions of the said chapter shall apply to such fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of excise shall in no case be less than the amount of credit that has been allowed in respect of such inputs under rule 7. Upon perusal of such provision, it emerges that inputs in respect of which credit is allowed under rule 57A, may be used in or in relation to manufacture of a final product or could also be removed under intimation to the specified authority for home consumption in the said factory. 8. From the above rules, it would emerge that if the respondent assessee had carried out manufacturing activity in PD Pumps brought in the factory, his case would be covered under clause(i) of rule 57F(1). If on the other hand Revenue was correct in contending that no such manufacturing activity was carried out, nevertheless, his cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed basis, it is also not disputed that the total amount of excise duty paid was much higher than the Modvat credit availed in respect of these items. 7.1 Under the proviso to sub-rule(1) of Rule 57F, where the inputs were removed from the factory for home consumption on payment of duty of excise, such duty of excise shall be the amount of credit that has been availed in respect of such inputs under Rule 57A. Therefore, the rule contemplated removal of inputs in respect of which a credit of duty had been allowed where they are not used in relation to manufacture of final products with a condition that on their removal, the excise duty shall be paid to the tune of the credit availed under Rule 57A for such inputs. In the present case, adm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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