TMI Blog2003 (7) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... han 10 tons, the Process Heat Division manufactured boilers of smaller capacity. The appellant took Modvat credit of the duty paid on the inputs used in the manufacture of boilers. Rule 57CC provided that where a manufacturer takes credit of the duty paid on the inputs other than fuel used in or in relation to the manufacture of both exempted and dutiable final product, he shall pay the amount equal to eight per cent of the price of the exempted final product, unless he maintains separate accounts of the inputs used in the manufacture of the exempted final product. With this provision in mind, the appellant from April 1997 onwards, while taking Modvat credit of the duty paid on all the inputs that it received, transferred to a separate stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions, contravention of the provisions of sub-rule (1) of Rule 57CC, the demand is unsustainable. It admitted its liability on account of the smallness of amount. It also made the submission as to the imposition of penalty. The Commissioner did not accept any of these contentions. He said that there was no halfway house in this matter and that, once the credit was taken initially of the duty paid on the inputs, the provisions of sub-rule (9) of Rule 57CC would not apply. Therefore, application of sub-rule (1) of Rule 57CC, 8% of the amount is required to be paid. He was of the view that the amount payable could be based upon the provisions of Rule 57-I. He therefore proceeded to confirm the entire demand and impose a penalty equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in the circular of the Board No. 591/28/2001-CX., dated 16-10-2001. This circular was no doubt issued after the Commissioner passed this order but it is still applied in support of the later proposition and he cites the decision of the Tribunal in CCE v. Nirma Ltd. (Appeal E/1378/2000) and the judgment of the Supreme Court in Ranadey Micronutrients v. CCE - 1996 (87) E.L.T. 19. He contends that even applying the provisions of rule 57CC, penalty in any case should not exceed Rs. 4 lakhs, and that penalties imposed on the employees are required to be set aside in view of the vastly reduced amount for the contravention. 6. The departmental representative reiterates the findings of the Commissioner and states that in any case penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplated by rule therefore has already been taken by the appellant. The circular was not issued when the Commissioner passed this order. However, we have held in our decision in CCE v. Nirma Ltd. that the circular would cover the earlier cases, as it relies upon the provisions of Rule 57C and Rule 57-I. In its judgment in Ranadey Micronutrients v. CCE - 1997 (87) E.L.T. 19, the Supreme Court recorded in paragraph 8 the contention in the affidavit of the department, that the circular relating to classification relied upon by the appellant should not be given effect to clearances made earlier, dealing with this contention in paragraph 15. It said "The argument that the later circular has only prospective operation and that it cannot apply t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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