COMMISSIONER OF CENTRAL EXCISE Vs. HERCULES MECH WORKS

JUDGEMENT

(1.) After examining the records and hearing both sides, I find that, in adjudication of a show -cause notice, the original authority bad demanded Rs. 1,33,700/ - from the assessee (respondent) for the period December 1997 to March 1998 in terms of Rule 57CC(2) of the Central Excise Rules, 1944. This amount was sought to be recovered under Rule 57I of the said Rules. The adjudicating authority also ordered recovery of interest on the above amount under Section 11AB of the Central Excise Act 1944 read with Rule 57I(5) of the aforesaid Rules. It also imposed a penalty of Rs. 1,33,700/ - on the assessee under Rule 57I(4) and Rule 173Q of the aforesaid Rules. A separate penalty of Rs. 20,000/ - was imposed under Rule 209A on Kishore Joshi, the Chief Executive of the assessee. The assessee and their Chief Executive appealed to the Commissioner (Appeals) and the latter allowed those appeals by holding that, in the absence of statutory machinery for recovery of any amount of 8% of the price of exempted final product in terms of Rule 57CC(2), such amount could not be recovered from the assessee and consequently no penalty could be imposed on them. In one of these appeals, the department seeks to recover Rs. 1,33,700/ - from the assessee under Rule 57I as also to have them penalised under the same provision of law. In the second appeal, the department insist on imposition of penalty on the Chief Executive under Rule 209A.

(2.) The Jt C.D.R. has reiterated the legal proposition made in the Revenue's appeal, which is to the effect that 8% of the price of exempted final product cleared by the assessee during the period of dispute would be recovered under Rule 57I of the 1944 Rules. In this connection, he claims support from the Board's circular No. 591/28/01 -CX dated 16.10.2001 wherein it was clarified that 8% of the price of exempted goods cleared by the manufacturer without payment of duty in a given period of time during which he also cleared dutiable final product on payment of duty, both without maintaining separate accounts in respect of common inputs, could be recovered under the provisions of Rule 12 (erstwhile Rule 57I). According to the Jt CDR, the Board's clarification with reference to Rule 12 of the Cenvat Credit Rules, 2001, is applicable with equal force to recovery of 8% of the total price of exempted goods cleared by a manufacturer under like circumstances during any earlier period covered by the erstwhile Central Excise Rules, 1944. The Jt CDR also refers to the Board's circular No. 654/45/02 -CX dated 19.8.2003 wherein similar cases covered by the Cenvat Credit Rules, 2002 were exempted and it was clarified, with reference to Explanation II to Rule 6 of the aforesaid Rules, that 8% of the price of the exempted goods payable by a manufacturer under Rule 6(3)(b) of the aforesaid Rules could be recovered under Rule 12 of the said Rules. The learned Counsel for the respondent submits that the above Explanation to Rule 6(3) of the Cenvat Credit Rules, 2002 had no retrospective effect so as to cover the instant case wherein an amount held to be payable under Rule 57CC(2) of the Central Excise Rules, 1944 is sought to be recovered under Rule 12 of the CENVAT Credit Rules, 2002. The learned Counsel, further, relies on the Tribunal's decision in Pushpaman Forgings v. Commissioner of Central Excise, Mumbai VII : 2002 (149) ELT 490 (Tri -Mumbai), wherein it was found that there was no recovery mechanism under the 1944 Rules in respect of any amount payable under Rule 57CC. Similar appeal filed by the department against the CESTAT's decision was dismissed by the Hon'ble Supreme Court (2003 (153) ELT A 89(SC)).

(3.) In the result, these appeals get dismissed.