CCE Vs. RAY BAN SUN OPTICS INDIA LTD.

JUDGEMENT

(1.) In these two appeals, filed by the Revenue, the issue involved is whether M/s. Ray Ban Sun Optics India Ltd. are liable to pay an amount equivalent to 8% of the price of the exempted goods under Rule 57CC of the Central Excise Rules, 1944.

(2.) Shri D.N. Chaudhary, learned DR, submitted that Respondents manufacture Sun Glasses, Metallic frames and Powered Sun -glasses and avail of Modvat Credit of the duty paid on inputs under Rule 57A; that Metallic frame up to 1.6.98 and powered sun -glasses were chargeable to nil rate of duty; that the Dy. Commissioner under the Adjudication Order confirmed the demand in terms of Rule 57CC as the Respondents were manufacturing both the dutiable as well as products chargeable to nil rate of duty; that however, the Commissioner (Appeals), under the impugned Order, has allowed the appeals holding that once the Respondents have paid the duty on intermediate product namely, piece parts, the Modvat Credit on inputs used in their making was definitely admissible irrespective of the fact that the final finished goods were cleared without payment of duty. The learned DR, further, submitted that the final products manufactured by the Respondents are metallic frames and powered sun -glasses which are chargeable to nil rate of duty; that for the application of Rules 57C and 57CC what is to be looked into is whether the final products are chargeable to duty or not; that Rule 57C(2) clearly provides that where a manufacturer avails of the Credit on any input and he is engaged in the manufacture of any final product which is chargeable to duty as well as in the manufacture of any other final product which is exempt from the whole of the duty of Excise or is chargeable to nil rate of duty in the same factory he has to comply with the provisions of Sub -rule (9) of Rule 57CC; that Rule 57CC(1) provides that where a manufacturer is engaged in the manufacture of any final product which is chargeable to duty as well as in any other final product which is chargeable to nil rate of duty and the manufacturer takes credit of the specified duty on any inputs which is used in or in relation to the manufacture of both the categories of final products, he has to pay an amount equal to 8% of the price of the exempted product, if he has not maintained separate inventories and account of the receipt and use of the inputs. He emphasized that since final products are metallic frames and powered sun -glasses which are chargeable to nil rate of duty, these provisions are applicable and as the Respondents have not maintained separate inventory and accounts of the inputs they are liable to pay 8% of the price of the duty free goods.

(3.) On the other hand Shri A.R. Madhav Rao, learned Advocate, submitted that the Respondents manufacture sun -glasses which are dutiable metal frames which were exempted prior to 1.6.98 and powered sun -glasses which are charged to nil rate of duty; that for the manufacture of these products they produce various parts in their factories out of various duty paid items in respect of which they avail Modvat Credit; that the parts which are used in the manufacture of sun -glasses are cleared without payment of duty availing the exemption under Notification No. 67/95 -CE;