WIPRO LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE, BANGALORE

JUDGEMENT

(1.) THE appellants are aggrieved with the Order -in -Appeal No. 1035/99 -C.E., dated 28 -9 -1999 by which he has held that the appellants are required to calculate duty at 8% of the value of the final products viz., Fatty acid and Stearic acid cleared during the period from 1 -9 -1996 to 28 -2 -1997 in pursuance of the provisions of the Rule 57CC of the Central Excise Rules. The demands has arisen on account of the fact that the Modvat credit availed in respect of inputs going into the aforesaid final products which are exempt from duty requires to be reversed in terms of Rule 57CC which came into force w.e.f 1 -8 -1996. It is the appellants contention that there was no machinery for recovery of duty in terms of Rule 57CC during the relevant period. It is also stated by them that they reversed the Modvat credit availed on the above inputs used for dutiable as well as exempted goods. The reversal was by way of debit entries in RG -23A Part -II. It is stated that the amount of Modvat credit taken on the inputs utilized in the manufacture of final duty on exempted goods can be debited in the Modvat credit account maintained by them. It is stated that on reversal of such Modvat credit, the appellant cannot be said to have taken credit of duty on inputs utilized in the manufacture of exempted final goods. They rely on the Apex Court judgment rendered in the case of Chandrapur Magnet Wires (P) Ltd. v. CCE [1996 (81) E.L.T. 3 (S.C.)].

(2.) LD . Counsel submitted that the issue is also covered by Board Circular No. 591/28/2001 -CX., dtd. 16 -1 -2001 wherein they have laid down the criteria for recovery of amounts which are not duty paid under the provisions of Rule 6 of CENVAT Credit Rules, 2001 (Rule 57CC of the erstwhile Central Excise Rules, 1944) and the clarification given thereunder. He submits that the Madras Bench has in the case of CCE v. Dharani Sugars and Chemicals [2002 (49) RLT 934] has also held that Rule 57CC is not attracted in the matter. He also relied on the judgment rendered in the case of Licon Eskey Enterprises (I) Pvt. Ltd. v. CCE [2002 (150) E.L.T. 695] wherein this Board Circular has been discussed and held that once the assessee was willing to reverse credit on inputs used in exempted final product in terms of Rule 57C ibid, demand of duty and imposition of penalty is not sustainable. He also relied on the judgment rendered in the case of Murugappan Morgan Thermal Ceramics Ltd v. CCE, Chennai [2004 (60) RLT 556].

(3.) ON a careful consideration of the submissions made and the perusal of the judgment and Circular referred to above, we notice that the appellants have made out a case in their favour. They have already reversed the credit of duty utilized in manufacture of exempted goods. Therefore, the demands raised cannot be confirmed and requires to be set aside. Furthermore, for the relevant period there was no provision of recovery of duty in terms of Rule 57CC as held in the cited judgements. In that view, the impugned order is set aside and appeal allowed.