By TIOL News Service

BANGALORE, SEPT 02, 2011: IN this Revenue appeal against an order of the Commissioner (Appeals), the appeal was filed on the basis of the authorisation given by the Commissioner of Central Excise and not by the Committee of Commissioners as required under of sub-section (2) of Section 35B of the Central Excise Act.

For the benefit of the Commissioner of Central Excise, who mindlessly assumed the power and issued the authorisation order, the Tribunal reproduced the text of sub-section (2) of Section 35B of the Act, and held that the present appeal, filed without valid authorisation, is only liable to be dismissed as not maintainable.

The Tribunal further observed,

The non-maintainability of the appeal apart, the cause of action for the appellant would also raise the eyebrows of any prudent person. The respondent was engaged in the manufacture of both dutiable and exempted products during the material period (March-November 2001), the exempted product being 'EPOX Pre-filled Syringe' which was chargeable to 'nil' rate of duty under the Central Excise Tariff during the said period. Sodium citrate was a common input used in the manufacture of both the dutiable and exempted products. Under Rule 57 AD (2) of the Central Excise Rules, 1944 and Rule 6(3)(b) of the Central Excise Rules, 2001, the manufacturer was required to maintain separate accounts for the receipts of such common inputs and their use in the manufacture of the dutiable and exempted final products. The manufacturer was allowed to take credit only on those inputs, which were used, in, or in relation to, the manufacture of the dutiable products. If the manufacturer took credit on the inputs used in, or in relation to, the manufacture of the exempted products also, he was required to pay an amount equal to 8% of the value (excluding sale tax and other taxes, if any, payable) of the exempted products when cleared from the factory. The respondent had, during the aforesaid period, availed MODVAT / CENVAT credit on sodium citrate used in the manufacture of EPOX Pre-filled Syringe also. However, having realized their mistake later, they calculated the amount of MODVAT / CENVAT credit availed on inputs used in the manufacture of the exempted products and reversed the amount in their MODVAT / CENVAT account on 18.1.2002. Insofar as sodium citrate was concerned, only 25 kgs. of the chemical was received by them and credit of Rs.252/- taken thereon. Out of the said quantity of sodium citrate, only 146 grams were used in the manufacture of EPOX Pre-filled Syringe, which involved MODVAT / CENVAT credit of Rs.1.50. The entire credit of Rs.252/- on sodium citrate was also reversed. It is on the ground of availment of credit of Rs.1.50 on common input (sodium citrate) by the respondent during the period of dispute that the original authority, in adjudication of the relevant show-cause notice, directed them to pay 8% of the value of the exempted product cleared from their factory during the said period, amounting to over Rs.30.5 lakhs. Justifiably, this action of the original authority amused the first appellate authority , which however, set aside the above demand as time-barred for an eminently valid reason.

On its part, the Tribunal dismissed the appeal as not maintainable.

(See 2011-TIOL-1123-CESTAT-BANG in 'Excise')